STATEMENTS 


OF 


HENRY  B.  THOMPSON 

Chairman  of  the  Advisory  Committee  on  Dyes  of  the  W ar  Trade 
Board  Section  of  the  State  Department 

AND 

ALBERT  M.  PATTERSON 

President  of  the  Textile  Alliance 


AND 


DOCUMENTS 

PRESENTED  BY 

FRANCIS  P.  GARVAN 

Alien  Property  Custodian 

AS  TAKEN  FROM  THE  OFFICIAL  RECORD  OF  THE 
HEARING  ON  THE  LONGWORTH  BILL  BEFORE 
THE  SUBCOMMITTEE  OF  THE  SENATE  FINANCE 
COMMITTEE  ON  SATURDAY,  DECEMBER  13,  19x9. 


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STATEMENTS 

OF 

HENRY  B.  THOMPSON 

Chairman  of  the  Advisory  Committee  on  Dyes  of  the  War  Traae 
Board  Section  of  the  State  Department 

AND 

ALBERT  M.  PATTERSON 

President  of  the  Textile  Alliance 


AND 


DOCUMENTS 

PRESENTED  BY 

FRANCIS  P.  GARVAN 

Alien  Property  Custodian 

AS  TAKEN  FROM  THE  OFFICIAL  RECORD  OF  THE 
HEARING  ON  THE  LONGWORTH  BILL  BEFORE 
THE  SUBCOMMITTEE  OF  THE  SENATE  FINANCE 
COMMITTEE  ON  SATURDAY,  DECEMBER  13,  1919. 


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STATEMENT  OF  MR.  FRANCIS  P.  GARVAN, 
ALIEN  PROPERTY  CUSTODIAN 


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Senator  Curtis.  Please  state  your  name  name  and  occupation 
to  the  reporter. 

Mr.  Garvan.  My  name  is  Francis  P.  Garvan,  Alien  Property 
Custodian. 

Senator  Curtis.  We  shall  be  glad  to  hear  anything  you  may 
wish  to  say. 

Mr.  Garvan.  I  feel  that  it  has  become  necessary  for  me  to 
come  here  and  testify,  as  my  personality  has  been  injected  into 
this  discussion  because  of  the  position  that  I  happened  to  occupy 
during  this  war.  There  are  certain  things  within  the  knowledge 
of  the  Government  which  it  is  my  duty  to  place  before  you,  and 
which  bear  upon  the  legislation  you  are  now  considering. 

I  have  no  desire  to  enter  into  any  personality  or  any  dispute 
with  any  one,  and  I  have  gone  over  my  papers  and  I  think  I  have 
eliminated  everything  I  could  which  mentioned  any  individual. 

However,  to  illustrate  my  point,  there  are  certain  documents 
which  I  must  lay  before  your  committee,  and  I  wish  you  to  con¬ 
sider  that  my  entire  motive  and  my  only  motive  is,  that  you  should 
know  the  historical  background  of  this  legislation  and  of  this 
necessity  upon  which  you  are  asked  to  legislate. 

When  we  went  into  the  Alien  Property  Custodian’s  office, 
among  the  first  things  we  were  asked  to  take  over  were  the 
agencies  of  the  German  dye  works  here.  That  caused  us  to 
study  the  history  of  the  relation  between  this  country  and  Ger¬ 
many.  We  found  that  immediately  upon  the  declaration  of  waf, 
to- wit,  August  i,  1914,  a  dye  embargo - 

Senator  Nugent  (interposing).  To  whom  do  you  refer  when 
you  say  we? 

Mr.  Garvan.  The  Alien  Property  Custodian.  I  was  then  at 
the  head  of  the  Bureau  of  Investigation  of  the  Alien  Property 
Custodian.  I  came  here  some  time  in  November,  1917,  shortly 
after  the  declaration  of  war,  right  after  the  act  was  enacted.  This 
was  immediately  upon  the  declaration  of  the  great  war  in  August, 
1914. 

Germany  declared  an  embargo  on  dyestuffs.  That  only  lasted 
a  few  days.  On  August  31  Germany  repealed  her  embargo  and 
her  policy  from  time  to  time  varied,  as  it  seemed  to  her  interests 

3 


V 


to  either  allow  dyestuffs  to  go  out  or  to  cut  them  off  altogether. 
But  there  were  two  shipments  of  dyestuffs  allowed  to  this  coun¬ 
try  subsequent  to  the  declaration  of  the  war,  on  the  Mantanas, 
and  the  steamship  Sun.  This  was  about  a  month  and  a  half 
supply. 

Senator  Nugent.  When  were  those  shipments  made? 

Mr.  Garvan.  In  October  of  1914,  or  about  that  time.  Later 
efforts  were  made  to  bring  other  shipments  of  dyes,  but  they 
were  not  successful.  Then  there  arose  a  demand  in  this  country 
that  some  position  be  taken  by  our  government  in  regard  to  the 
English  blockade,  and  there  arose  from  Germany  a  demand  that 
in  return  for  the  relief  to  America  by  the  importation  of  dye¬ 
stuffs,  that  she  should  change  her  policy — or  diplomatic  policy 
towards  England  in  reference  to  the  blockade. 

That  culminated  on  March  6,  1915,  in  the  following  letter  being 
served  upon  the  Secretary  of  State,  Hon.  William  J.  Bryan, 
Secretary  of  State,  Washington,  D.  C.  The  letter  is  as  follows: 

OFFICE  OF 
HERMAN  A.  METZ 

122  Hudson  Street, 

New  York,  March  6,  1915. 

Hon.  William  J.  Bryan, 

Secretary  of  State , 

Washington,  D.  C. 

My  dear  Mr.  Bryan  : 

Referring  to  my  letter  of  yesterday  regarding  the  dyestuff 
situation,  I  beg  to  say  that  I  received  the  following  cable  this 
morning  from  Germany  via  Milan:  “Latest  developments  make 
further  shipments  dyestuffs  impossible.”  The  cable  was  sent  to 
me  by  Dr.  Adolph  Haeuser,  the  president  of  the  “Verein  zur 
Wahrung  der  Interressen  der  Chemischen  Industrie  Deutch- 
lands,”  which  is  composed  of  the  various  chemical  and  dyestuff 
manufacturers  of  Germany,  with  headquarters  in  Berlin,  and 
shows  the  attitude  of  German  manufacturers  of  dyestuffs  in  the 
present  crisis. 

It  is  safe  to  assume  that  they  will  take  every  precaution  and 
go  to  any  length  to  prevent  their  products  reaching  consumers 
of  enemy  countries,  and  unless  some  agreement  can  be  reached 
to  have  the  present  condition  modified,  the  manufacturers  of  this 
country  will  suffer  fully  as  much  as  those  of  belligerent  countries. 

Yours  very  truly, 

(Signed)  H.  A.  Metz. 


4 


That  was  the  first  official  notice  served  upon  this  Government 
that  our  necessity  for  dyes  would  not  be  satisfied  by  Germany 
without  a  variation  of  our  policy  towards  England. 

Mr.  Metz.  May  I  say  that  at  that  time  that  letter  was  written 
at  the  request  of  the  State  Department.  They  had  requested  me 
to  do  that. 

Mr.  Garvan  (continuing).  The  next  paper  which  I  wish  to 
show  will  show  that  the  policy  rapidly  developed  to  force  pressure 
upon  our  Government  by  reason  of  the  necessities  of  the  dye 
users  in  this  country.  The  condition  of  the  dye  users  had  become 
quite  acute.  This  paper  was  taken  from  the  files  of  Dr.  Albert. 
It  is  a  telegram  to  the  Foreign  Office  in  Berlin.  This  letter 
decoded  reads  as  follows : 

“Serial  No.  432  of  March  13,  1915.  It  is  reported  to  me  by 
Hossenfelder,” 

who  was  the  trade  counselor  in  this  country,  I  believe  Consul 
General  of  all  the  German  consults  in  this  country,  located  in 
New  York. 

“Telegram  No.  4,  that  the  stock  of  dyes  in  this  country  is  so 
small  that  by  a  German  embargo  about  four  million  American 
workmen  might  be  thrown  out  of  employment. 

(Signed)  “Bernstorff.” 


“Washington,  D.  C.,  Mar.  14,  1915. 
“Imperial  German  Embassy. 

“J.  A.  1794. 

“Copy  respectfully  sent  to  Privy  Councillor  Albert-,  New  York, 
for  kind  inspection. 


“The  Imperial  Ambassador, 
“By  HaTZFELDT.” 


It  was  sent  to  Germany  to  bring  pressure  upon  us. 

That  was  followed  by  the  final  order  to  shut  off  dyestuffs  in 
this  country.  It  was  dated  April  17,  1915,  and  reads  as  follows: 
“Millington  Behren  Nine  Berlin. 

“Hamilton  Yerkes  urgently  request  preventing  all  Hoechst  and 
similar  shipments.  Inform  immediately. 

“Charles  Suchard.” 


We  then  found  in  Dr.  Albert’s  file  the  explanation  of  this  cable, 
dated  April  19,  1915.  It  follows: 

“New  York,  April  19,  1915. 

“Dear  Mr.  Plossenfelder” — Hossenfelder  was  acting  Imperial 
Consul  General — “Sunday  night  the  following  wireless  message, 
went  to  Berlin  through  the  agency  of  the  Deutsche  Bank : 


5 


“  ‘Hamilton  associates  Yerkes  urgently  requests  to  prevent  all 
Hoechst  and  similar  shipments.  Inform  immediately.’ 

“  ‘Hamilton’  means  ‘Embassy,’  I  am  Yerkes.  Unfortunately 
there  was  no  code  word  for  consulate  general,  so  we  had  to  desig¬ 
nate  you  by  the  word  ‘associates.’  In  the  stress  of  business  I 
had  no  time  to  ask  your  assent,  as  you  know  we  were  agreed  on 
the  matter. 

“The  reference  to  ‘Hoechst’  is  meant  to  convey  at  the  same 
time  a  warning  in  regard  to  Mr.  Metz.  I  assume  that  this  is 
understood  over  there.  I  purposely  refrained  from  direct  men¬ 
tion  of  Mr.  Metz  as  well  as  a  more  definite  characterization  of 
the  dyestuffs,  because  it  had  to  be  taken  into  account  that  the 
American  Government  will  be  informed  of  the  contents  of  the 
message,  both  directly  and  indirectly  through  the  English.  For 
evident  reasons  it  would  not  be  advisable  that  the  advice  from 
official  sources  here,  not  to  ship  dyestuffs  and  potash,  should  come 
to  the  attention  of  the  American  authorities. 

“Copy  of  the  letter  of  the  Foreign  Trade  Advisor  of  the  State 
Department  follows. 

“With  kind  regards, 

“Your  Devoted. 


“Dr.  Hossenfelder, 

“Acting  Imperial  Consul  General, 

“New  York.” 

Senator  Calder.  Who  is  that  signed  by? 

Mr.  Garvan.  Dr.  Albert.  You  can  tell.  He  says  “I  am 
Yerkes.” 

Senator  Watson.  I  take  it,  Mr.  Garvan,  that  this  association 
is  for  the  purpose  of  showing  the  necessity,  in  the  opinion  of  the 
Alien  Property  Custodian,  of  taking  over  the  German  patents  at 
that  time  and  the  German  business. 

Mr.  Garvan.  I  also  want  to  show  you  that  on  that  day,  in 
April  1915,  we  were  in  the  same  position  that  we  are  today,  and 
that  the  same  system  threatens  us  today,  to  a  diminished  degree, 
it  is  true,  but  only  to  the  extent  that  it  has  been  diminished  by  the 
progress  that  has  been  made  by  the  American  dye  manufacturers. 
I  ask  to  be  allowed  to  develop  that.  I  am  not  introducing  that  for 
the  sake  of  past  soreness,  but  I  am  asking  to  introduce  it  to  bring 
the  matter  up  to  and  show  how  it  applies  to  our  situation  today. 
Then,  having  turned  off  the  stopper  on  our  supply  of  dyes  from 
Germany,  they  then  gave  orders  to  all  the  representatives  of  the 
so-called  big  six  in  America  to  do  all  they  could  to  intensify  the 
strain  and  our  necessities.  That  I  will  show  you  by  the  following 
papers. 


6 


The  New  York  World  of  April  28,  1915,  printed  the  following 
editorial : 

“Helping  Us  Out 

“Two  large  German  chemical  and  aniline  dye  concerns  are 
reported  to  be  establishing  in  New  Jersey  to  supply  American 
demands  hitherto  supplied  from  Germany. 

“There  are  some  singular  omissions  in  the  news.  So  far  as 
known  these  German  concerns  have  made  no  preliminary  inquiry 
about  high  tariff  prospects  for  aniline  dyes  or  the  outlook  for  a 
Republican  victory  in  next  year’s  elections.  They  have  not  prom¬ 
ised  to  extend  their  plants  here  if  more  tariff  protection  is  given, 
or  threatened  to  dismantle  them  if  it  is  not. 

“Perhaps  they  are  counting  on  a  long  war  and  its  continued 
exclusion  of  German  commerce  from  the  seas.  Perhaps  they 
calculate  that  whether  the  war  is  long  or  short,  labor  will  be 
scarce  and  high-priced  in  Germany  for  many  years.  At  all  events 
it  is  becoming  evident  that  if  American  genius  and  enterprise 
are  not  equal  to  the  task  under  existing  favorable  conditions  of 
making  the  country  independent  of  Germany  in  the  matter  of 
aniline  dyfes,  German  enterprise,  cut  off  at  home  by  a  destructive 
war,  will  be  glad  to  do  it  for  us.” 

That  editorial  brought  forth  the  following  letter  from  Capt. 
Boy-Ed,  whom  you  know,  which  said — Boy-Ed  wrote  to  Albert 
immediately  upon  his  return,  as  follows : 

“imperial  german  embassy. 

“Naval  Attache. 

“B.  No.  5567. 

“New  York,  April  28,  1915. 

“To  His  Honor 

“Privy  Councillor  Albert, 

“45  Broadway,  New  York  City. 

“My  dear  Privy  Councillor  : 

“1.  It  is,  of  course,  unnecessary  to  call  your  attention  to  the 
brilliant  article  which  is  reprinted  in  today’s  Staatszeitung. 

“I  shall  be  one  of  thousands  who  would  like  to  see  this  article 
circulated  in  millions  of  copies.  You  will  surely  find  ways  and 
means  to  do  that.  Especially  that  excellent  rhetorical  question 
should  be  exploited  whether  the  United  States  would  indeed  have 
delivered  arms  to  Japan  in  case  of  a  war  with  England  (under  the 
silent  assumption  that  only  a  one-sided  export  of  arms  would  be 
possible)  and  should  be  sent  as  far  as  possible  for  an  express 
answer  to  all  the  pro-Britjsh  American  newspapers. 

“2.  Today’s  World  contains  the  enclosed  little  article  on  the 
alleged  erection  of  dyestuff  factories  in  New  Jersey  by  Germany. 

7 


“In  case  you  can  take  no  steps  to  prevent  an  undertaking  of 
this  kind,  I  beg  you  to  state  whose  else  attention  I  could  call  to 
the' matter. 

“With  cordial  and  recognized  attachment, 

“Always  yours  devotedly, 

“K.  Boy-Ed,  Commander  ” 

Mr.  Albert  answered  him  as  follows : 

“April  28,  1915. 

“Very  Honorable  Captain  :” 

I  will  not  read  the  first  paragraph,  as  it  has  nothing  to  do  with 
dyestuffs.  The  second  and  last  paragraphs  of  the  letter  are  as 
follows : 

“With  regard  to  dyes,  I  got  into  touch  with  local  experts  in 
order  to  determine  what  truth  there  is  in  the  news.  According 
to  my  knowledge  of  things,  the  matter  is  a  fake,  in  as  much  as 
our  factories  have  bound  themselves  orally  and  by  word  of  honor 
to  do  nothing  in  the  present  situation  which  might  help  the  United 
States. 

“Many  thanks  for. every  suggestion.  In  case  the  new$  in  para¬ 
graph  2  is  confirmed,  I  will  inform  the  State  Secretary  of  the 
Interior. 

“With  hearty  greetings.” 

Senator  Watson.  What  year  was  that  ? 

Mr.  Garvan.  April  28,  1915. 

Senator  Watson.  That  is  two  years  before  we  got  into  the 
war  ? 

Mr.  Garvan.  Yes,  sir.  So  we  have  here  an  attempt  both  by 
their  agents  here  and  by  the  people  abroad  to  bring  every  particle 
of  suffering  and  pressure  upon  America  in  order  to  affect  us  in 
our  governmental  attitude.  That  is  further  shown  by  the  extent 
to  which  they  were  willing  to  go  by  their  refusing  or  neglecting 
to  ship  salvarsan.  In  the  words  of  Mr.  Metz,  whose  testimony 
I  have  here,  he  states  that,  as  for  salvarsan,  Germany  wanted  the 
United  States  to  starve  to  death.” 

Contemplate  for  a  moment  what  this  means  in  view  of  the  fact 
that  we  are  supposed  to  have  millions  of  syphilitics  here.  Think 
what  an  extension  of  the  disease,  and  what  an  intensification  of 
suffering  and  distress  Germany  was  willing  to  impose  upon  her 
best  market  in  order  to  obtain  her  imperial  will. 

But  America  did  not  cringe  to  the  Germans.  Her  people  began 
to  get  busy,  increased  our  few  small  dye  establishments,  erected 
others,  called  upon  the  people  to  endure,  and  from  that  time  on 
an  ever-increasing  independence  of  the  American  textile  indus¬ 
tries  and  other  dependent  industries  has  been  accomplished,  and 

8 


the  possibility  of  exercising  such  wrongful  pressure  by  any  other 
nation  has  steadily  diminished.  The  same  is  true  as  to  salvarsan. 
We  got  busy,  mastered  its  manufacture,  until  today  we  have 
increased  its  consumption  ten  times  and  reduced  its  cost  from  the 
Germon  cost  of  $3.50  per  treatment  to  60  cents. 

To  go  back  a  moment,  their  point  of  view  in  one  of  their 
wavering  intervals  before  their  final  decision  in  1915  may  perhaps 
be  instructive. 

At  that  time,  I  will  say,  it  is  due  to  Mr.  Metz  to  say  that  at  all 
times  he  did  his  best  to  get  over  dyestuffs  to  this  country.  Mr. 
Metz  went  to  Germany  in  October  1914,  with  numerous  letters 
of  introduction  from  Bernstorff  and  from  the  different  people, 
and  this  was  the  viewpoint  of  Albert  at  that  time,  as  disclosed  by 
the  letter  which  he  gave  to  Mr.  Metz  to  present  to  the  people 
over  there.  The  letter  is  as  follows : 

“New  York,  November  16,  1914. 
“My  dear  Benefactors  and  Friends, 

“Assembled  in  Hohen  Hause,  Wilhelmstrasse,  74: 

“Perhaps  by  the  time  when  you  receive  these  lines,  Herr  H.  A. 
Metz,  of  New  York,  will  call  with  a  letter  of  introduction.  I 
wish  earnestly  to  request  you  to  take  good  care  of  him  and  treat 
him  very  nicely.  Maybe  you  will  take  him  to  breakfast  some  time 
or  show  him  other  favors  after  the  American  fashion,  in  the  event 
that  Excellenz  Richter  or  Dr.  Muller  do  not  do  it.  I  am  afraid 
they  will  be  too  busy. 

“At  the  same  time  I  call  your  attention  to  something  which  you 
will  have  the  kindness  to  bring  before  the  proper  authorities : 

“In  considering  all  the  favors  to  which  Herr  Metz  is  entitled 
it  must  not  be  forgotten  that  he  is  a  competitor  of  the  other  dye- 
works.  For  that  reason  I  have  just  cabled  you  that  the  bonds 
covering  re-export  of  dyestuffs  are  to  be  deposited  with  me.  Also, 
in  allotting  ship  space  for  return  freight  it  must  be  remembered 
that  the  other  chemical  works  are  to  have  a  word  to  say.  I 
earnestly  recommend  that  this  exportation  of  dyestuffs  be  some¬ 
what  more  favored  than  has  heretofore  been  the  case,  perhaps 
through  my  own  suggestion,  as  otherwise  there  is  danger  that 
America  itself  will  take  up  the  production.  Plans  are  already 
being  prepared  for  a  high  protective  tariff,  which  will  be  taken  up 
by  the  Congress  which  meets  in  December.  As  Metz  is  a  member 
of  the  Congress,  he  is  the  right  man  to  fight  this  measure. 

“On  the  other  hand,  the  entire  production  of  dyes  should  not 
be  handed  over  to  him,  otherwise  he  might  use  the  opportunity 
to  eliminate  his  competitors.  He  is  the  real  type  of  the  ‘smart’ 
American,  who  as  a  matter  of  course  uses  every  situation  for  his 


9 


own  business  purposes.  Perhaps  I  may  also  to  ask  you  specially 
to  bring  this  to  the  attention  of  the  proper  authorities. 

“With  hearty  greetings, 

“Your  respectful  admirer, 

“Albert.” 

Senator  Watson.  Do  you  know  whether  or  not  that  letter 
was  ever  brought  to  the  attention  of  Mr.  Metz? 

Mr.  Garvan.  He  carried  it  with  him. 

Mr.  Metz.  Just  want  to  say  that  I  never  saw  such  a  letter 
and  if  I  carried  it  the  contents  were  not  known  to  me  per¬ 
sonally.  I  carried  dozens  of  letters. 

Mr.  Garvan.  This  letter  was  a  letter  which  Mr.  Metz  car¬ 
ried  with  him.  He  probably  never  read  it. 

Mr.  Metz.  I  never  saw  a  letter  like  that. 

Senator  Watson.  Did  it  not  state  that  Mr.  Metz  would  ap¬ 
pear  with  a  letter  of  introduction? 

Mr.  Garvan.  There  were  a  half  dozen  letters  of  introduc¬ 
tion,  whether  this  particular  letter  went  in  the  Ambassador’s 
pouch  I  do  not  know.  That  is  the  only  one  that  refers  to  the 
tying  up  of  the  American  dye  industry. 

Senator  Watson.  What  I  was  trying  to  get  at  was  whether 
or  not  Mr.  Metz  had  knowledge  of  that  letter  or  had  carried 
it  over  with  him. 

Mr.  Garvan.  I  am  not  introducing  that  letter  to  show  any¬ 
thing  about  Mr.  Metz,  I  am  introducing  it  to  show  the  Ger¬ 
man  mind  towards  the  American. 

Senator  Watson.  I  understand  your  idea  but  I  wanted  the 
other  information  if  you  could  give  it. 

Mr.  Garvan.  Then  again  on  March  3,  1916. 

Senator  Curtis.  As  a  result  of  that  visit  of  Mr.  Metz,  did 
we  get  dyestuffs? 

Mr.  Garvan.  Not  at  that  time ;  later  we  did  in  the  Deutch- 
land’s  shipments.  Mr.  Metz  can  correct  me  if  I  am  not  cor¬ 
rect. 

Mr.  Metz.  We  got  four  shipments  and  I  got  salvarsan 
after  that. 

Within  three  weeks  after  the  deliberate  attempt  in  April 
1915,  to  cripple  our  three  billion  dollars  of  industry  dependent 
upon  dyes,  came  the  sinking  of  the  “Lusitania.”  This,  as  you 
know,  was  followed  by  other  outrages,  and  a  constant  grow¬ 
ing  anti-German  feeling  in  America.  This  growth  of  feeling, 
and  the  acts  of  the  German  Government  causing  it,  came  to 
be  discussed  among  the  German  representatives,  and  in  refer¬ 
ence  to  the  subject  we  now  have  in  hand  some  took  the  side 


io 


that  the  withholding  of  dyes  from  America  was  a  useless  irrita¬ 
tion  and  not  effective,  while  another  party  still  insisted  upon 
its  economic  value  to  Germany.  This  discussion  is  best  shown 
by  a  report  of  Consul-General  Hossenfelder,  dated  March  3, 
1916,  to  his  Excellency,  the  Imperial  Chancellor,  Dr.  von 
Bethman-Hollweg,  which  is  as  follows: 

(File  No.  245C.) 

“J.  No.  2919. 

“K.  No.  102. 

“New  York,  March  3,  1916. 

“The  proceedings,  which  have  taken  place  here  during  the 
last  weeks  in  the  domain  of  domestic  and  foreign  politics, 
make  it  seem  proper  in  my  opinion,  to  treat  connectedly  anew 
our  economic-political  relation  to  the  United  States. 

“The  revolt,  certainly  without  example,  which  has  broken 
out  in  Congress  against  the  President  on  account  of  his  at¬ 
titude  in  the  submarine  boat  questions,  has  not  the  least  thing 
to  do  with  the  feeling  in  the  country  toward  Germany.  Ac¬ 
cording  to  the  explanations  given  by  Your  Excellency  and  by 
Under  State  Secretary  Zimmermann  the  people  were  con¬ 
vinced  that  Germany  had  reached  the  limit. of  its  compliance, 
they  saw  themselves  placed,  through  the  President,  before  the 
danger  of  a  war  with  Germany  and  through  their  chosen  rep¬ 
resentatives  made  him  understand  that  they  did  not  want  war 
and  would  prevent  it  by  every  means.  In  this  decision  the 
determining  factor  was  the  consideration  that  a  break  with 
Germany  would  have  incalculable  consequence  for  the  United 
States  and  that  no  sufficient  reason  was  at  hand  to  take  a 
step  fraught  with  such  consequences.  Again  the  conviction 
that  a  break  with  Germany  is  to  be  avoided  in  the  interest  of 
the  United  States,  is  not  based,  as  might  be  supposed,  on  the 
fear  of  the  German  Empire,  but  on  the  provision,  that  the 
Americans,  in  case  they  take  a  hand  in  the  conflict,  would  have 
to  raise  war  costs  for  the  allies  and  most  of  all  that  the  country 
would  be  divided  into  two  hostile  camps  by  a  participation  in 
the  European  War,  out  of  which,  under  increasing  embitter- 
ment,  severe  internal  conflicts  could  develop.  Sober  business 
sense  and  cool  calculation  between  the  stakes  and  the  possible 
gain  have  guided  the  American  peoples,  not  by  any  means  a 
change  in  their  sympathies  for  the  individual  nations  waging 
war.  This  statement  seems  to  me  necessary  in  order  to  meet 
those  who,  in  spite  of  all  experience,  stick  to  the  illusion  that 
a  transformation  of  feeling  in  favor  of  Germany  can  be  de¬ 
tected  and  lay  claim  to  every  incident,  by  which  our  interests 


11 


are  not  directly  injured,  as  a  proof  of  the  correctness  of  their 
view. 

“Germany  and  the  United  States  even  after  the  outbreak  of 
the  war  were  willing  to  carry  on  commerce  with  each  other. 
This  commerce  was  tied  up  merely  by  England  which  wants 
to  prevent  Germany  from  drawing  necessary  materials  from 
abroad  on  the  one  hand  and  on  the  other  of  improving  her 
finances  by  the  sale  of  her  own  products.  For  this  reason 
the  relation  between  the  United  States  and  England  is,  for  the 
duration  of  the  war,  of  far  reaching  significance  also  for  our 
economic  relations  to  the  Union.  Hitherto  the  United  States 
has  accepted  the  injury  to  its  commerce  by  England,  has  borne 
the  loss  arising  therefrom  and  has  taken  no  steps  to  force  the 
abolition  of  the  existing  situation,  in  its  essentials  contrary  to 
international  law.  Does  there  exist  now  in  reality  any  well- 
founded  prospect  that  a  change  is  taking  place  in  this  attitude? 
This  question  I  must  answer  with  an  onconditional  ‘No.’ 

“Among  us  the  view  has  plainly  hitherto  found  zealous  advo¬ 
cates  that  the  United  States  would  proceed  against  England 
and  the  English  aggressions  as  soon  as  we  shall  have  yielded 
to  American  wishes  in  the  Lusitania  affair.  As  is  well  known 
to  your  Excellency,  I  have  always  considered  this  view  to  be 
a  grievous  mistake.  If  my  conviction  hitherto  was  based 
merely  on  personal  observations  and  inferences,  I  believe  now 
I  am  justified  in  assuming  that  the  incidents  of  the  last  few 
weeks  have  brought  out  the  feeling  of  the  government  here 
without  concealment  and  (in  a  manner)  recognizable  by  every¬ 
body.  We  meet  in  Washington  only  hostile  feelings  and  con¬ 
scious  partisanship.  However,  the  fact  remains  that  the  chief 
trend  of  the  politics  of  the  Federal  Government  is  determined 
by  internal  political  pressure  and  counterpressure. 

“So  far  as  the  feeling  throughout  the  country  is  concerned, 
the  English  aggressions,  especially  the  molestation  of  Amer¬ 
ican  travelers,  the  confiscation  of  mail,  and  the  supervision  of 
American  business  by  British  diplomatic  and  consular  rep¬ 
resentatives  has  recently  beyond  doubt  aroused  strong  dislike. 
But  the  bearers  of  this  bad  humor  which  is  openly  expressed 
very  often,  are  those  in  the  main  who  have  been  directly  or 
indirectly  hit  and  who  in  their  totality  do  not  make  up  the 
whole  of  public  opinion  by  a  long  shot.  There  exists  only  an 
invitation  which  makes  the  wish  for  a  remedy  become  vocal 
in  these  special  cases  but  which  is  not  in  the  remotest  strong 
enough  to  break  the  bonds  sealed  by  race,  language  and  views 
of  life ;  which  bind  this  country  to  England,  or  from  the 
feeling  of  mortification  to  arouse  sympathies  for  the  enemies 


12 


of  England.  The  longer  the  war  lasts,  the  clearer  it  will 
become  even  to  the  prepossessed  American  that  England  is 
sorely  fighting  for  her  existence.  His  ethics  allows  the  Amer¬ 
ican  regardlessly  to  exploit  the  embarrassing  position  of  the 
fellow  members  of  his  race  to  his  own  advantage.  Nothing 
lies  farther  away  from  him  than  to  take  the  side  of  Germany 
in  this  struggle  for  Anglo-Saxon  supremacy.  He  cannot  at 
all,  therefore,  wish  in  his  heart  that  his  country  should  hinder 
England  from  wounding  Germany  or  that  he  should  furnish 
Germany  the  means  of  being  able  to  continue  the  battle 
against  England.  Ample  provision  is  made  here  that  the 
question  whether  the  lack  of  certain  raw  materials  will  not 
finally  force  Germany  to  a  peace,  is  kept  continually  before 
the  eyes  of  the  American  public.  I  am,  therefore,  not  able  to 
see  upon  what  a  justified  hope  for  an  ‘about  face’  in  popular 
opinion  in  our  favor  could  be  based. 

“Economic  considerations,  i.  e.,  their  own  advantage,  for 
high  finance  here  and  the  industry  dependent  upon  it  for  the 
stock-exchange  and  all  those  who  live  from  the  manufacture 
of  arms,  ammunition,  and  war  material,  point  the  way  into 
the  English  camp,  as  I  have  already  explained  in  earlier  re¬ 
ports.  They  have  all  the  most  urgent  interests  in  the  preserva¬ 
tion  of  England  and  in  following  an  American  policy  which 
takes  account  of  English  needs.  In  regard  to  the  political 
influence  lodged  in  these  groups  I  need  not  spread  myself 
further  here  in  view  of  former  reports  rendered. 

“On  the  other  hand  a  different  relation  exists  with  the  pro¬ 
ducers  of  raw  materials  who  are  robbed  by  England  of  the 
possibility  of  selling  their  products  to  the  Central  powers,  and 
with  those  business  circles  and  branches  of  industry  which 
need  German  wares  and  German  raw  material.  With  both  the 
interest  in  the  continuation  of  commerce  with  Germany  stands 
in  the  foreground. 

“Among  the  producers  of  raw  materials  the  cotton  planters 
occupy  the  first  place.  I  can  only  repeat  here  what  I  have 
already  elucidated  in  another  place,  that  the  cotton-planters 
are  not  suffering  distress,  that  their  pressure  meets  a  stronger 
counterpressure  and  that  they,  with  their  possible  considera¬ 
tion  will  find  no  hearing  in  Washington  as  long  as  the  prices 
of  cotton  are  maintained  at  a  proper  level.  That  is  the  case 
at  the  present  time  and  according  to  all  reckoning  will  be  the 
case  for  an  ample  period  to  come.  If  later  the  prices  for  cot¬ 
ton  should  fall  below  a  certain  level,  it  not  only  lies  within  the 
realm  of  possibility  to  remedy  the  complaints  of  the  planters 
by  government  measures,  but  England  also  will  be  reminded 


13 


of  her  promise  previously  given  to  be  willing  to  support  the 
cotton  market  if  necessary.  On  wheat,  which  is  at  a  very 
much  higher  price  than  before  the  war,  the  farmers  have  made 
enormous  profits.  For  the  copper  market  other  conditions 
hold  as  the  conditions  of  a  whole  fraction  of  the  population 
does  not  depend  on  it.  Incidentally  the  prices  are  extra¬ 
ordinarily  high.  The  consumption  of  a  whole  list  of  other 
articles  has  so  increased  as  a  result  of  the  war  both  here  and 
in  the  foreign  lands  hostile  to  us  that  the  loss  of  the  demand 
from  the  Central  Powers  is  being  more  than  equalized.  From 
the  group  of  producers  of  raw  materials  also  no  pressure 
promising  results  is  to  be  expected.  That  the  army  of  im¬ 
porters  have  not  today  the  interest  in  the  maintenance  of  un¬ 
hindered  commercial  intercourse  with  Germany  as  at  the  be¬ 
ginning  of  the  war,  because  their  business  energy  has  been  ap¬ 
plied  to  other  ends,  the  business  expert  has  alrady  explained 
in  his  report  No.  3,  Part  II  of  the  14th  of  this  month.  The 
movement  emanating  from  the  importers  has  therefore,  with 
the  lapse  of  time,  lost  very  considerably  in  extent  and  signif¬ 
icance. 

“Neither  through  money  nor  the  granting  of  credit,  nor  by 
any  other  means,  can  that  critical  situation  be  relieved  which 
has  been  called  forth  by  the-  removal  of  certain  articles  which 
are  obtainable  only  in  Germany.  These  articles  are  chiefly 
potash,  chemicals,  and  dyestuffs.  Potash  is  desired  by 
agriculture  inclusive  of  the  cotton-planters,  all  the  more 
urgently  since  even  last  year  sufficient  fertilizer  could  not  be 
brought  to  the  soil.  They  enumerate  the  industries  which 
are  suffering  from  the  scarcity  of  German  chemicals  would  lead 
too  far.  I  may,  however,  mention  that  the  cry  for  help  which 
comes  from  the  world  of  physicians  is  becoming  louder  and 
louder  and  more  and  more  insistent.  The  country,  however,  is 
being  hit  hardest  by  the  lack  of  dyestuffs  which  makes  itself 
felt  more  and  more  every  day  in  regard  to  which  I  may  refer 
to  the  report  of  the  business  expert  No.  5,  Part  II,  of  the  15th 
of  this  month.  What  the  United  States  is  able  to  produce  in 
dyestuffs  is  neither  in  quality  nor  in  shades  in  the  remotest 
sufficient  to  meet  the  existing  demand.  It  is  now  acknowl¬ 
edged  here  on  all  sides  that  the  reports  to  the  contrary  of  Mr. 
Norton  are  not  only  too  optimistic  but  directly  untrue.  With 
these,  the  assurance  of  Mr.  Redfield,  Secretary  of  Commerce,  at 
whose  suggestion  Norton’s  reports  were  made,  have  lost  their 
value.  Of  the  agitation  brought  about  by  the  government 
there  is  left  only  the  effort  to  carry  through  some  legislation 
by  which  great  hinderances  are  to  be  put  in  the  way  of  the 


14 


importation  of  dyestuffs  in  the  future.  In  estimating  the  effect 
which  will  be  produced  by  cutting  off  the  importation  of 
potash,  chemicals  and  dyestuffs  it  should  be  taken  into  con¬ 
sideration  that  the  circle  of  persons  effected  is  very  extra¬ 
ordinarily  large.  Through  the  lack  of  dyestuffs  alone  not 
only  is  a  whole  list  of  important  industries  (wool,  cotton, 
leather,  paper  industry,  etc.)  gradually  made  lame,  but  for 
the  great  public,  living  becomes  more  expensive  both  through 
the  rise  in  price  as  well  as  through  the  small  durability  of  all 
products  for  whose  production  colors  are  used.  We  are  here, 
unquestionably,  face  to  face  with  conditions  which  are  with¬ 
out  a  parallel  in  the  past. 

“When  I  balance  the  pros  and  cons  with  each  other  I  come 
to  the  following  conclusions  in  regard  to  Germany.  If  we, 
at  some  calculable  future  time,  should  be  restricted  to  Amer¬ 
ican  articles  in  order  to  be  able  to  carry  on  the  war,  some¬ 
thing  which  would  certainly  not  escape  the  official  American 
representatives  in  Germany  and  which  would  not  remain 
hidden  from  England,  we  would  not  get  these  articles  because 
England  would  not  permit  it  and  the  dominant  factors  in  the 
United  States  likewise  do  not  wish  it.  If  the  government  here 
on  account  of  individual  English  aggressions  should  screw  it¬ 
self  up  to  inconsiderate  language  in  its  notes  addressed  to 
England,  it  is  to  be  assumed  that  these  notes  are  first  and  fore¬ 
most  intended  for  home  consumption.  That  the  United  States 
should  decide,  in  case  of  necessity,  to  give  emphasis  to  its 
demands  by  measures  of  compulsion,  I  consider  impossible 
before  as  well  as  after.  Besides,  for  example  even  a  threat 
of  an  embargo  on  munitions  and  war  materials  would  make 
little  impression  on  England  at  present,  since  such  an  embargo 
would  hit  America  much  harder  than  the  continuation  of  the 
suppression  of  commercial  intercourse  with  the  Central 
Powers. 

“If  the  idea  of  the  possibility  that  the  United  States  in  order 
to  carry  through  its  demands  could  use  measures  of  com¬ 
pulsion  or  of  retaliation,  is  dropped,  the  fact  still  remains  that 
England  in  many  important  things  is  dependent  upon  the  sup¬ 
port  and  the  good  will  of  the  Union  to  a  far-reaching  degree, 
and  could,  therefore,  see  itself  forced  voluntarily  to  yield  to 
certain  American  wishes,  even  if  the  fulfilment  of  these  wishes 
touched  English  interests.  The  situation  created  by  the  lack 
of  potash,  chemicals  and  dyestuffs  will  make  a  decision  neces¬ 
sary  within  a  calculable  period.  I  consider  it,  therefore,  to  be 
probable  that  the  American  government,  which  cannot  escape 
its  obligation  in  relation  to  its  own  country,  will  demand  from 


15 


England  the  unmolested  exchange  of  the  German  articles  men¬ 
tioned  for  American  products,  like  wool,  etc.  If  this  should 
take  place  and  England  should  show  itself  inclined  to  yield  to 
the  demands,  which  is  very  doubtful,  the  question  still  remains 
open  whether  a  real  gain  is  thereby  achieved  for  Germany.  1 
must  answer  this  question  in  the  negative. 

“In  his  report  No.  3,  Part  II  of  the  14th  of  this  month  already 
mentioned,  the  business  expert  has  treated  the  changes  which 
have  taken  place  in  the  economic  domain  here  as  the  im¬ 
mediate  consequences  of  the  war.  He  has  explained  that  not 
only  a  far-reaching  dislike  to  Germany  and  German  products 
has  gained  a  footing  here  and  indeed  in  the  influential  business 
circles,  but  that  zealous  efforts  are  being  made  to  render  them¬ 
selves  independent  of  Germany  in  the  industrial  field,  that 
especially  the  elevation  of  tariff  barriers  and  the  sharpening 
of  procedure  in  collecting  tariffs  is  favored  by  both  great 
parties.  On  the  basis  of  his  searching  investigations  he  has 
come  to  the  conclusion  that,  after  the  end  of  the  war  we  will 
be  compelled  to  build  up  our  export  business  to  the  United 
States  anew  from  the  bottom  up.  I  agree  with  his  arguments 
in  all  points. 

“The  conviction  that  the  United  States  is  chosen  to  draw 
permanent  advantages  without  effort  out  of  the  economic 
exhaustion  of  the  nations  involved  in  war  has  become  a  sort 
of  dogma  to  the  American.  We,  on  the  other  hand,  upon  whom 
war  has  inflicted  deep  wounds,  will  naturally  not  feel  any  in¬ 
clination  after  the  war  to  delay  the  healing  of  these  wounds 
by  allowing  a  neutral  of  strength  in  the  economic  domain  to 
follow  the  grievous  passage  at  arms  just  concluded.  In  the 
transactions  with  the  United  States  (Tariff  Navigation)  for 
which  we  must  make  ourselves  ready  after  the  war,  we  shall 
have,  therefore,  an  extraordinarily  difficult  situation.  In  these 
transactions  the  circumstance  will  be  of  such  a  great  weight 
that  Germany,  victorious  in  all  the  theaters  of  war  during  the 
war  has  been  compelled  to  put  up  with  a  neutrality  existing 
only  in  name,  a  neutrality,  of  the  mendacity  of  which  people 
here  are  fully  conscious.  As  I  am  acquainted  with  the  quite 
ridiculous  belief  of  the  American  in  his  own  superiority  and 
its  consequences,  I  consider  it  extraordinarily  important  that  a 
counterpoise  be  created  here.  The  opportunity  for  it  is  at 
hand.  Without  needing  to  run  the  risk  which  in  the  inter¬ 
course  of  the  nations  is  bound  up  with  every  arrangement  of 
war  measures,  we  now  have  in  our  hand  the  means  of  show¬ 
ing  the  American  by  withholding  potash,  chemicals,  and  dye¬ 
stuffs  that  he  cannot  do  without  Germany;  we  can  bring  be- 

16 


fore  his  eyes  what  value  appropriate  commercial  relations  with 
Germany  have  for  his  own  land.  After  the  war  the  op¬ 
portunity  for  a  practical  demonstration  of  our  strength  and 
his  dependence  will  not  exist  unless  we  allow  it  to  come  to  a 
trade  war.  If  we  allow  the  American  to  relieve  the  critical 
situation  in  which  he  is  placed  by  pressure  upon  England  we 
shall  show  ourselves  in  his  eyes  only  as  not  equal  to  the 
situation  and  shall  uselessly  play  our  chief  card.  Since,  as  I 
have  argued  above,  we  shall  not  receive  the  articles  which  we 
unconditionally  need  for  the  continuation  of  the  war,  from 
America,  the  alleviation  which,  for  example,  the  occasional 
exchange  of  a  quantity  of  dyestuffs  for  a  quantity  of  cotton 
may  afford,  is,  in  my  opinion  from  the  German  viewpoint  no 
equivalent  for  that  which  the  American  receives.  There¬ 
fore,  we  should,  according  to  my  conviction,  hold  ourselves 
absolutely  passive  in  relation  to  the  proposals  for  the  exporta¬ 
tion  of  potash,  chemicals  and  dyestuffs,  and,  if  the  opportunity 
arises,  make  the  sanction  for  them  not  dependent  upon  the 
consent  for  an  exchange  of  articles  but  upon  the  abolition  en 
bloc  of  all  the  hindrances  to  intercourse  contrary  to  inter¬ 
national  law  which  have  been  instituted  by  England.  The  im¬ 
possibility  of  fulfilling  this  demand  would  merely  contribute 
to  give  the  effects  of  the  lack  of  German  articles  a  very  intensive 
shape.  In  political  regards  we  have  nothing  to  hope  from  the 
United  States  during  the  war  and  the  time  following  on  the 
treaty  of  peace  which  will  be  dominated  by  the  immediate 
recollection  of  the  war.  Experience  has  taught  us  that  our 
willingness  to  meet  half-way  has  been  answered  by  setting  up 
new  demands.  As  I  have  occupied  this  position  from  the  very 
beginning,  I  may  indeed  repeat  it  here  once  more  after  the  events 
have  spoken. 

“In  conclusion  I  should  like  to  refer  still  to  a  phenomenon 
which  no  one  here  can  pass  over.  It  concerns  the  attitude  of 
the  large  German  firms  or  large  firms  representing  German 
interests.  It  is  striking  in  what  an  increasing  degree  these 
firms,  with  a  disregard  of  the  cause  of  all  Germany  are  con¬ 
cerned  only  about  their  own  business  welfare  and  their  profits 
in  money,  since  the  danger  that  we  might  sacrifice  our  posi¬ 
tion  as  a  great  power  in  this  war,  appears  to  them  to  be 
averted.  On  this  fact,  the  justification  for  the  contradiction 
can  be  measured  which  might  easily  be  raised  directly  or  in¬ 
directly  to  the  views  of  certain  business  circles  represented 
here.  The  prospects  for  large  profits  are  most  weighty  among 
the  representatives  of  the  dyestuffs  industry.  Therefore,  in 
these  circles  the  doctrine  is  most  loudly  championed  that  the 

1 7 


resumption  of  exports  even  without  a  quid  pro  quo  and  an 
exchange  of  wares  must  be  Germany’s  principal  aim  in  com¬ 
mercial  politics. 

“The  chemists  whose  judgment  as  specailists  is  not  deter¬ 
mined  by  the  commercial  directors  over  them,  unreservedly 
acknowledge  that  the  building  up  of  a  chemical  industry  of 
equal  rank  in  the  United  States  will  take  years  under  the 
best  circumstances,  that  it  is,  besides,  hardly  possible  without 
the  help  of  the  talents  trained  in  Germany.  What  can  take 
place  in  years  will  take  place  whether  we  furnish  dyestuffs 
now  or  not.  For  our  national  economy  some  million  dollars 
which  flow  into  the  pockets  of  the  dye  industry  are  of  small 
significance.  As  long  as  we  buy  in  Scandinavia,  Holland  and 
the  Balkan  countries,  the  rate  of  exchange  of  the  Imperial 
mark  will  be  unfavorably  influenced  in  the  United  States  also. 
The  ideal  means  of  supporting  the  rate  of  exchange  is  the 
sale  of  German  securities,  for  the  systematic  working  up  of 
the  field  a  large  market  is  to  be  found  here. 

“A  copy  of  the  report  goes  to  the  Imperial  German  Embassy. 

(Signed)  “Hossenfelder. 

“To  His  Excellency 

“The  Imperial  Chancellor, 

“Dr.  von  Bethmann-Hollweg.” 

(Translated  by  J.  P.  Hoskins.) 

EMJ 

I  also  desire  to  submit  for  your  consideration  some  further 
letters  from  Dr.  Haeuser,  head  of  the  Farbwerke  Hoechst  dye 
works  and  also  president  of  the  German  Society  for  the  Preser¬ 
vation  of  German  Commercial  Interests. 

“Farbwerke  vorm.  Meister  Lucius  &  Bruning, 

“Hoechst  am  Main. 

“Hoechst  a.  M.,  June  20,  1913. 

“My  dear  Mr.  Metz  : 

“I  received  your  two  letters  of  the  4th  and  10th  of  this  month. 

“As  regards  Hydrosulfit,  I  can  only  explain  to  you  once  more, 
that  we  invoice  exactly  according  to  the  lowest  market  prices  here, 
that  we  naturally  deduct  packing  and  freight  from  the  duty- 
invoice. 

“Your  communications  about  Bayer  interested  us  greatly.  In  the 
meantime  I  have  also  heard  personally  from  Mr.  von  Boettinger, 
as  you  telegraphed  to  us,  that  Elberfeld  have  established  a  new 
Bayer  Company,  and  apparently  also  a  special  company  for  the 
pharmacy  department;  for  the  erstwhile  process  this  new  estab- 

18 


lishment  will  certainly  not  be  of  much  use  to  them.  The  handing 
over  of  the  papers  to  Dr.  Hess  seems  to  have  been  a  real  joke. 

“It  is  very  interesting,  that  you  now  receive  the  samples  of  the 
competing  factories  on  the  part  of  the  dyers  for  examination.  I 
can  nevertheless  imagine  that  an  uncomfortable  situation  may 
sometime  arise  for  you  because  of  it. 

“We  are  naturally  not  interested  that  hydro-blue  or  carbazol 
colors  should  be  placed  on  the  free  list;  would  not,  however,  on 
our  part  come  forth  directly  against  Cassella;  you  will  therefore 
on  your  part  omit  any  direct  work  against  Cassella.  I  also  repeat, 
as  I  have  already  informed  you  in  my  communication  of  June 
9th,  my  opinion,  that  the  best  for  all  of  us  would  be,  if  certain 
dyestuffs,  including  the  alizarin  dyes,  would  pay  about  15  per  cent 
duty,  and  only  indigo  remains  on  the  free  list.  I  should  consider 
it  a  great  success  were  you  successful  in  leading  up  to  such  a 
change  in  the  tariff. 

“Mr.  Hinrichs  wrote  us  on  the  9th  of  this  month,  and  gave  us 
once  more,  in  an  enclosure,  his  drawn-up  agreement,  which,  how¬ 
ever,  contains  nothing  new.  I  answered  him  today,  according 
to  enclosed  summary,  and  hope  that  he  will  now  be  able  to  take 
requisite  measures.  Against  a  deposit  of  the  shares  for  us  in 
England  (perhaps  at  Speyer  Brothers  in  London)  we  have  natu¬ 
rally  no  objection;  on  the  contrary,  it  would  be,  as  you  yourself 
rightly  say,  still  more  convenient  for  us  to  have  the  deposit  in 
England. 

“Mr.  Widemann  was  here  recently,  and  journeyed  away  yester¬ 
day.  I  did  not  find  him  looking  well,  and  had  the  impression  that 
he  was  truly  in  need  of  a  rest.  I  really  heard  nothing  new  from 
him. 

“With  best  greetings, 

“Yours  respectfully, 

“Dr.  HaEUSER.” 

( Translation .) 

“Farbwerke  vorm.  Meister  Lucius  &  Bruning, 

“Hoechst  am  Main. 

“Hoechst  a/M.,  May  14,  1913. 

“My  dear  Mr.  Metz: 

“I  received  your  letters  of  the  1st  and  5th  inst.,  and  extend  my 
best  thanks  for  the  interesting  news  contained  therein.  In  the 
interim,  I  wrote  you  two  letters  on  the  8th  inst.,  copies  of  which 
I  enclose  herewith,  and  from  them  you  will  see  that  we  at  least 
desire  to  accede  to  your  wishes.  Should  extraordinary  difficulties 
present  themselves,  we  will  quickly  overcome  them.  A  trip  across 
the  water  right  now  I  would  not  relish,  but  if  it  cannot  be  other¬ 
wise  arranged,  I  will  have  to  decide  to  do  so.  I  believe,  however, 

19 


that  I  can  correctly  judge  the  situation  over  here,  and  that  it  is 
possible  for  me  to  reach  the  same  conclusion  as  you  have.  In 
this  regard  you  are  perfectly  right,  that  attention  has  been  at¬ 
tracted  to  the  activities  of  the  Chemical  Industry  concerns,  and 
that  the  American  Government  secures^information  regarding 
them.  "* 

“I  beg  you  to  have  patience  with  Hinrichs;  he  is  rather  pecu¬ 
liar,  but  on  the  other  hand  he  is  capable  and  dependable. 

“The  other  firms  here  are  also  agitated  over  the  situation.  We 
must  allow  each  of  them,  even  Kalle  &  Co.,  to  do  that  which, 
from  the  nature  of  their  peculiar  circumstances,  they  find  the 
proper  course  to  pursue.  What  concerns  you  and  overselves,  if 
we  agree  upon  the  changes  you  propose,  we  at  least  set  aside  any 
ground  for  complaint. 

“With  reference  to  the  drawback  as  to  our  correspondence  with 
Hinrichs,  it  is  so  arranged  that  it  can  be  presented  to  the  Govern¬ 
ment  in  unrecognizable  shape,  being  m  the  nature  of  a  private 
code,  the  necessity  of  which  I  regret.  Mr.  Hinrichs  writes  us 
in  his  last  letter  of  the  30th  ult.,  if  matters  of  interest  are  not 
received,  that  it  is  not  necessary  to  produce  such  correspondence, 
but  only  receipts  and  such  matters.  Hinrichs,  however,  did  not 
follow  my  wishes  as  to  receipts,  etc.  Under  these  circumstances 
it  appears  to  me  that  the  most  charitable  and  safest  plan  is  not  to 
induce  Mr.  Hinrichs  to  make  use  of  the  correspondence. 

“Your  idea  that  Kuttroff  remains  with  the  native  Elberfeld 
Company  in  a  certain  clerical  capacity  does  not  meet  with  the 
approval  of  Messrs.  Von  Elberfeld  and  von  Ludwigshafen. 

“I  can  readily  imagine  that  you  are  unusually  busy  in  Wash¬ 
ington  now.  The  ‘Congressional  Record’  which  you  were  kind 
enough  to  send  me,  I  will  read  with  much  interest.  From  it  one 
can  best  picture  the  situation. 

“The  Badische  is  naturally  not  much  pleased  that  Alizarin  has 
to  pay  a  duty  of  10  per  cent,  whereas  the  Indanthren  and  the 
remaining  Anthracenderivate  must  pay  full  duty.  We  trust,  how¬ 
ever,  that  you  will  be  able  to  push  through  Alizarins  without  any 
duty  and  have  the  duty  on  dyestuffs  reduced.  It  would  at  any 
rate  be  very  nice,  though  I  cannot  really  believe  it  possible,  after 
we  were  so  badly  cut  up  by  the  revision  of  the  tariff.  I  beg  of 
you  to  forecast  exactly  the  best  results  obtainable  in  delivering 
to  your  f.  o.  b.  European  ports. 

“For  the  kindness  shown  my  wife  by  your  sending  her  an  invi¬ 
tation  to  attend  the  opening  session  of  the  ‘House  of  Representa¬ 
tives,’  I  thank  you  many  times  in  her  behalf. 

“With  best  wishes, 

“Yours  sincerely, 

“Dr.  Haeuser.” 


20 


( Translation .) 

“Confidential. 

“Hoechst  am  Main,  August  5,  1915. 

“Dear  Mr.  Metz: 

“Your  friendly  letter  of  the  14th  ult.  received  and  I  send  my 
best  thanks  for  your  esteemed  communication.  I  am  still  awaiting 
the  receipt  of  the  revised  accounts  sent  by  Mr.  Spielhagen. 

“Regarding  the  Bethlehem  Coal  &  Iron  Co.  and  the  Deutsche 
Bank,  I  have  heard  nothing,  and  I  can  hardly  believe  that  under 
existing  conditions  the  Deutsche  Bank  would  support  any  such 
undertaking,  to  the  detriment  of  the  German  dyestuff  industry. 

“That  Bayer  is  in  back  of  it,  I  believe  even  less,  for  I  know  from 
only  recent  reports  that  no  German  dye  factory  even  considers, 
during  the  present  shortage  of  chemicals,  to  manufacture  anything 
new  over  there.  Bayer  would  certainly  not  undertake,  as  far  as 
one  can  see,  to  take  up  something  new,  when  the  few  articles 
(Blue,  Vesuvin,  Bismark  Brown,  Fuchsin)  have  already  been 
delivered  by  them  over  there. 

“We  lay  great  stress  upon  the  fact  that  you  personally  will  not 
participate  in  any  manufacturing  enterprise. 

“The  present  conditions  cannot  last  much  longer.  If  our  suc¬ 
cessful  movement  in  Russia  continues  in  the  same  ratio  as  during 
the  past  week,  the  Russians  will  get  war-weary,  and  they  will 
then  be  compelled  to  sue  for  a  separate  peace,  which  would 
quickly  change  the  situation. 

“As  soon  as  normal  conditions  return,  those  who  took  advantage 
of  the  present  abnormal  and  uncertain  conditions  to  build  up  new 
enterprises  will  later  have  to  suffer  heavily. 

“I  thank  you  for  your  interesting  report  on  indigo  shipments 
from  China. 

“With  best  wishes,  Unsigned.” 

Perhaps  the  best  historical  picture  of  the  entire  matter  was 
expressed  in  Dr.  Albert’s  long  cable  to  his  home  government, 
dated  April  26,  1916,  as  follows: 

“Dr.  Albert's  Cable  on  the  Export  of  Dyestuffs ” 

“69A. 

“April  26,  1916. 

“The  policy  of  withholding  dyestuffs  was  at  the  beginning  of 
the  war  without  doubt  the  only  possible  one.  The  hope  was  enter¬ 
tained  of  bringing  the  American  industries  which  were  solely 
dependent  upon  German  deliveries  of  dyestuffs  into  the  position 
that  they  would  have  to  insist  on  the  importation  of  dyestuffs 
under  the  conditions  demanded  by  Germany. 

21 


“This  policy  has  been  in  part  successful  in  so  far  as  a  great 
dearth  of  dyestuffs  has  beyond  all  doubt  arisen.  The  industries 
concerned  have  developed  a  lively  activity  in  order  to  induce  the 
government  to  accept  the  German  conditions — export  of  dyestuffs 
only  in  return  for  the  importation  of  goods  to  Germany.  But  it 
has  been  demonstrated,  nevertheless,  that  the  political  pressure 
of  these  circles  was  not  strong  enough  to  cause  the  American 
government  to  force  England  to  give  up  this  blockade  on  imports 

II 

“In  the  meantime  the  lack  of  dyestuffs  has,  to  be  sure,  not  been 
eliminated,  but  it  has  been  in  many  respects  mitigated.  The 
public  has  once  become  accustomed  to  ask  for  articles  which  are 
dyed  with  colors  produced  here  in  the  country.  Moreover,  a 
certain  development  of  the  American  dyestuff  industry  has  taken 
place.  This,  to  be  sure,  is  not  in  a  position  to  compete  with 
German  industry  in  the  most  important  and  most  numerous  prod¬ 
ucts,  but  has,  nevertheless,  assured  itself  of  a  certain  market 
territory.  A  lively  demand  for  protective  tariffs  and  for  clauses 
in  the  tariff  legislation  which  shall  prevent  ‘dumping’  has  been 
called  into  existence.  By  emphasizing  the  national  element  a 
certain  pressure  has  been  exerted  on  the  American  Government 
which  can,  to  be  sure,  hardly  have  as  its  result  the  rearing  up  of 
an  American  dyestuff  industry  equal  to  competition,  but  which 
may  easily  lead  to  the  result  that  legislation  embarrassing  in  many 
respects  will  be  introduced. 


Ill 

“The  German  Government  has  been  made  responsible  for  the 
famine  in  dyestuffs,  as  the  press  of  the  Allies  has  succeeded  in 
veiling  the  real  state  of  the  case  in  a  very  skillful  way.  The  Ger¬ 
man  standpoint  was  understood  in  interested  circles  at  the  begin¬ 
ning.  But  when  the  withholding  of  dyestuffs  exerted  no  influence 
on  the  attitude  of  the  American  Government  in  relation  to  the 
English  blockade,  the  uselessness  of  this  procedure  should  have 
been  recognized  in  the  opinion  of  many  Americans.  As  that  did 
not  come  to  pass,  motives  were  sought  for  and  found  in  the  anu 
(endeavor)  that  the  German  Government,  by  cutting  off  dye¬ 
stuffs,  wanted  to  hinder  the  development  of  the  American  textile 
industry  in  South  America.  Accordingly,  the  arguments  which 
undoubtedly  influenced  the  English  policy  were  turned  against  us. 
In  view  of  the  great  sensitiveness  which  all  South  American  ques¬ 
tions  meet  in  respect  of  the  Monroe  Doctrine,  an  unpleasant 
political  impression  has  been  thereby  created. 


22 


IV 


“The  effort  of  the  Allies  to  put  the  blockade  against  Germany 
into  effective  shape  is  lately  no  longer  restricting  itself  to  the 
prevention  of  importation.  Since  importation  from  the  countries 
bordering  on  Germany  cannot  be  prevented,  attempt  has  been 
made  to  sharpen  the  effect  of  the  blockade  by  preventing  payment 
for  this  importation.  Not  only  the  exportation  of  German  wares, 
but  also  most  of  all  the  creation  of  German  credit  by  the  sale  of 
securities  is  made  difficult  in  every  way  possible.  As  it  was  openly 
expressed,  the  Allies  want  to  prevent  the  formation  (establish¬ 
ment)  of  every  new  German  credit  abroad.  As  Germany  in  fact 
has  large  imports  for  which  it  cannot  pay  entirely  by  exports 
into  neighboring  countries,  and  as  the  sale  of  securities  has  been 
rendered  difficult  for  various  reasons,  the  German  rate  of  ex¬ 
change  has  in  fact  started  on  a  downward  path.  The  Allies  take 
advantage  of  that  very  skillfully  to  show  that  Germany  has 
reached  the  end  of  its  resources.  The  declining  rate  of  exchange, 
they  argue,  shows  an  exhaustion  of  German  credit.  With  these 
arguments  they  reconcile  to  a  certain  extent  that  part  of  the 
public  which  considers  the  blockade  illegal,  but  for  humanitarian 
reasons  long  for  a  swift  and,  if  possible,  bloodless  ending  of  the 
war.  From  this  point  of  view  every  means  which  brings  about 
a  strengthening  of  the  rate  of  exchange  is  of  the  greatest  impor¬ 
tance. 

“It  therefore  appears  especially  desirable  to  acquire  credit  in 
America  by  the  release  of  dyestuffs.  This  credit,  on  the  basis 
of  a  quantity  of  15,000  tons  at  today’s  prices,  might  yield  a  sum 
of  20  to  30  million  dollars.  If  this  sum  is  paid  in  an  appropriate 
way  and  a  correspondingly  skillful  use  is  made  of  it,  it  is  easily 
possible  to  influence  the  rate  of  exchange  thereby.  It  is  not  a 
question  of  bringing  the  exchange  up  to  a  definite  point  by  this 
sum.  But  an  upward  movement  can  be  effected.  If  such  a 
movement  sets  in,  other  forces  will  work  in  the  same  direction. 
Most  of  all,  bear  speculation  (short  selling),  which  has  been 
carried  on  to  a  considerable  extent,  will  be  discouraged.  Besides, 
it  is  to  be  assumed  that  a  rise  in  the  rate  of  exchange  will  exert  a 
favorable  influence  on  the  sale  of  the  German  war  loans.  A 
low  rate  of  exchange  certainly  invites  many  a  one  to  buy ;  a 
declining  rate,  however,  discourages  the  owners  of  securities, 
deters  them  from  new  purchases,  and  leads  to  a  certain  depression 
in  all  circles  coming  into  question. 

VI 

“Different  objections  have  been  raised  against  this.  It  has 
been  argued  that  the  sum  is  not  sufficient  to  bring  about  a  lasting 


23 


improvement  in  the  rate  of  exchange.  The  rate  would  decline 
again,  and  with  that  the  purpose  of  the  Allies  to  show  the  weak¬ 
ness  of  Germany  in  a  falling  rate  of  exchange  would  be  attained. 
Of  course,  it  cannot  be  told  today  whether  the  attempt  will  be  suc¬ 
cessful  or  not.  But  the  following  can  be  assumed  with  certainty : 
if  30  million  dollars  with  proper  use  cannot  hold  up  a  decline  in 
the  rate  of  exchange,  then  the  manipulations  of  the  Allies  without 
such  a  counter-influence  must  bring  about  a  far  worse  depression. 
A  second  objection  is  this:  the  submissiveness  which  we  show  in 
this  field,  it  is  asserted,  plainly  shows  Germany’s  necessity  to 
mobilize  its  last  reserves.  There  is  no  doubt  that  this  argument 
will  be  used  by  the  Allied  press.  But  the  fact  must  not  be  over¬ 
looked  that  a  successful  move  by  Germany  in  this  field  will  be 
very  unwelcome  to  the  Allies.  It  will  not  be  hard  to  prove  that 
the  sale  of  comparatively  small  lots  is  to  be  regarded  as  an 
accommodating  attitude  toward  American  consumers  and  not  as 
a  sign  of  weakness. 

“As  a  matter  of  principle  we  do  not  surrender  our  standpoint 
in  relation  to  the  Allies.  By  the  creation  of  American  credit  we 
thwart  the  blockade  of  exports  attempted  by  them  which,  as  a 
matter  of  principle,  is  certainly  just  as  important  as  the  attempt, 
and,  moreover,  the  unsuccessful  attempt,  to  thwart  the  blockade 
on  imports  by  withholding  dyestufifs. 

“As  far  as  the  fear  is  concerned  that  Germany’s  compliance  in 
relation  to  the  Americans  might  be  regarded  as  weakness  and 
might  thereby  render  difficult  our  other  negotiations,  this  argu¬ 
ment  is  certainly  without  foundation.  The  expositions  of  prin¬ 
ciples  with  the  United  States  in  regard  to  the  submarine  boat 
question  has  reached  such  a  stage  that  comparatively  subordinate 
questions  are  without  influence.” 

Senator  Watson.  What  is  the  date  of  that? 

Mr.  Garvan.  The  26th  of  April,  1916. 

Their  change  of  policy  is  shown  from  the  fact  that  they  dis¬ 
cussed  the  15,000  tons  that  were  to  come  in  to  equalize  the  mark. 
The  result  of  that  was  the  shipment  of  the  concentrated  dyes  by 
the  undersea  boats. 

Senator  Watson.  When  did  the  undersea  boats  get  in? 

Mr.  Garvan.  One  was  docked  in  November. 

Mr.  Metz.  One  boat  arrived  in  June,  1916,  and  the  other  in 
November,  1916.  The  Bremen  had  a  big  cargo,  but  she  never 
arrived.  She  was  lost. 

Mr.  Garvan.  The  direct  result  indicated  a  change  in  this  policy, 
the  new  idea  being  to  send  undersea  boats. 

Mr.  Bernstorff,  however,  seems  to  have  gone  too  far  to  satisfy 
his  own  government  in  stating  that  their  policy  had  completely 
reversed.  On  May  21,  1916,  Bernstorff  received  the  following: 


24 


“For  Privy  Councillor  Albert.  * 

“Berlin,  May  21,  1916. 

“Foreign  Office,  11  U2235,  No.  47. 

“His  Excellency ,  The  Imperial  Ambassador, 

“Count  V.  Bernstorff, 

“Washington,  D.  C. 

“In  the  New  Yorker  Staatszeitung  of  April  16  we  find  the  note 
printed,  concerning  aniline  dyes,  supposedly  directed  by  Your 
Excellency  to  Lansing.  Therein  is  stated : 

“  ‘Under  these  conditions  (?)  the  Imperial  Government  is, 
if  necessary,  even  prepared  to  put  forth  every  effort  to  have 
German  chemical  factories,  in  so  far  as  circumstances  will 
allow,  to  put  aside  all  other  work  and  manufacture  such 
colors  as  are  especially  urgently  needed  in  the  American 
market/ 

“In  this  especial  attention  should  be  given  that  unnecessary 
competition  is  not  made  against  the  American  dyestuff  industry. 
This  announcement,  which  does  not  correspond  to  the  facts,  is 
likely  to  bring  forth  discord  in  the  interested  circles  here,  or  will 
result  in  difficulties  (inconveniences)  to  our  industry.  I  shall 
look  forward  to  a  report  by  the  next  mail  if  you  please,  which 
will  be  necessary  in  explanation  of  the  information  given  out  and 
which  goes  beyond  the  limits  of  the  authority  given  you. 

“Zimmerman.” 


And  then  Count  von  Bernstorff  explained : 

“Secret. 

“For  Privy  Councillor  Albert, 

“ Imperial  German  Embassy. 

“A  No.  322. 

“In  reply  to  the  official  notice  of  23  IV  16  No.  182  and  of 
21  V  T6— No.  11  20  2235. 

“Rye,  N.  Y.,  June  21,  1916. 
“On  File  (Dyestuffs). 

“In  the  Envelope. 

“Post  Code  (Cipher). 

“Among  the  reasons  which  were  determinative  for  the  refusal 
to  export  dyestuffs  without  equivalent,  the  indirect  effect  of  this 
refusal  on  the  English  blockade  was  not  only  the  principal  one, 
but  also  the  reason  in  regard  to  which  it  would  have  been  difficult 
for  the  Imperial  Government  to  form  a  judgment  of  its  own. 
On  this  account  I  expressly  emphasized  the  fact  in  radiogram 
No.  695  of  March  26,  1916,  that  agreement  existed  between  the 
Consulate  General  and  myself  in  regard  to  the  elimination  of  this 

25 


reason,  as  had  become  clear  in  a  thoroughgoing  discussion  with 
the  Consulate  General,  together  with  the  consultation  of  persons 
interested.  Regarding  the  remaining  reasons  contained  in  the 
memorandum  of  the  Consulate  General  of  March  24,  1916 — the 
shaping  of  the  rate  of  exchange,  reaction  on  the  sale  of  the  war 
loan,  damage  to  our  credit,  the  effect  of  a  compliance  on  the 
politico-commercial  negotiations  after  the  war,  the  demand  in  the 
U.  S.  for  sales  to  South  America — I  had  no  occasion  to  make  a 
report  to  your  Excellency,  wholly  aside  from  the  fact  that  I 
regarded  the  reasons  as  of  secondary  character  and  as  not  valid, 
since  the  arguments  determinant  in  this  case  could  be  judged 
better  in  Berlin  than  here.  I  had,  therefore,  particularly  in  view 
of  the  brevity  imposed  by  the  radiogram  and  of  the  circumstances 
that  the  American  Government  will  receive  knowledge  of  the 
content  of  the  telegram,  no  reason  to  go  into  these  arguments  or 
to  mention  the  attitude  of  the  Consulate  General. 

“But  in  so  far  as  the  purely  formal  question,  whether  the 
Consulate  General  agreed  with  my  proposal,  came  into  con¬ 
sideration,  apart  from  the  pertinent  considerations,  I  felt  that  I 
might  presuppose  it  as  known  to  your  Excellency  that  the  ad¬ 
ministrator  of  the  Consulate  General  at  this  time  is  accustomed 
to  contradict  in  every  case  any  suggestion  offered  by  me — 
whether  it  is  a  question  of  political,  politico-commercial,  econ¬ 
omic  or  propagandist  measure — and  to  give  expression  to  his 
differing  opinion  not  only  without  delay  in  a  report  to  your 
Excellency,  but  also,  with  the  extension  of  his  criticism  to  the 
policy  followed  in  general  by  the  Imperial  Government  in  ref¬ 
erence  to  the  United  States,  publicly  in  the  German  Club  in 
the  presence  of  numerous  members.  I,  therefore,  assumed  that 
your  Excellency  would  presuppose  the  opposition  of  Consul 
Hossenfelder,  as  given,  in  the  present  case  also  and  restricted 
myself,  for  this  reason,  to  the  establishment  of  the  agreement 
on  the  most  important  point  which  was  not  to  be  assumed 
without  further  explanation. 

“I  mention  expressly  only  Consul  Hossenfelder  because,  to 
my  sincere  regret,  in  view  of  the  state  of  his  health,  I  am  no 
longer  able  to  attribute  any  importance  whatever  to  the 
opinion  of  Mr.  Waetzoldt.  Mr.  Waetzoldt  is  so  reduced  in 
memory,  in  his  judgment,  and  his  ability  to  work,  that  he 
is  no  longer  able  to  cope  with  the  present  continual  change 
of  conditions,  and  stands  under  the  influence  of  the  argu¬ 
ments  occasionally  delivered  to  him,  which,  according  to  the 
nature  of  things,  leads  him  to  share  in  the  opinion  of  Consul 
Hossenfelder  in  regards  to  reports  and  memoranda  in  writing. 
The  fact  that  he  also  signed  the  memorandum  in  regard  to  dye- 

26 


stuffs  cannot  be  taken  into  consideration,  characteristic  in 
this  regard  is  the  reference  to  Mr.  Waetzoldt’s  opinion  in 
the  report  of  the  Consulate  General  of  April  26,  ’16, — Jr.  No. 
4612 — concerning  the  reaction  of  the  release  of  dyestuffs  on 
public  opinion  here,  since  Mr.  Waetzoldt,  a  few  days  later,  at 
a  meeting  of  the  committee  of  dyestuff  importers,  representa¬ 
tives  of  the  Republic  Trading  Corporation  and  their  attorneys 
agreed  to  the  contrary  (opposite)  opinion. 

“The  German  reproduction  of  the  note  anent  the  question  of 
coal  tar  dyes  contained  in  the  New  York  Staatszeitung  of 
April  21,  1916,  is  a  retranslation  from  the  English  text.  The 
passage  in  question  runs  as  follows,  in  the  original  note : 

“  ‘Under  these  conditions  the  Imperial  Government,  if  need 
be,  is  even  ready  to  work  to  the  end  that  the  German  chemical 
factories,  in  so  far  as  it  is  at  all  compatible  with  the  conditions, 
be  relieved  of  other  work,  and  produce  those  colors  which  are 
needed  with  especial  urgency,  in  the  American  market.’ 

“For  the  comprehension  of  this  declaration  I  may  observe 
that  the  purpose  of  my  proposal  to  sanction  the  exportation  of 
dyestuffs  was  either  to  achieve  the  politico-financial  effects 
bound  up  with  it,  or,  and  this  was  from  the  outset  the  more 
probable  case,  to  shove  the  blame  for  the  non-deliverery  of 
dystuffs  upon  England.  The  purpose  of  the  measure  was, 
therefore,  in  its  essentials,  a  political  one  in  so  far  as  the  deep- 
rooted  dissatisfaction  which  embraced  wide  groups,  on  ac¬ 
count  of  the  refusal  to  release  German  dyestuffs,  should  be 
done  away  with,  and  a  convenient  means  of  agitation  be 
snatched  from  the  English.  This  succeeded  in  full  measure. 
In  order  to  attain  the  result,  nevertheless,  it  was  necessary  in 
the  next  place,  to  prevent  our  accommodating  spirit  at  the 
time  from  being  construed  as  a  bluff.  In  explanation  of  the 
former  German  attitude,  it  had  been  pleaded  here  from  dif¬ 
ferent  sides  that  Germany  was  not  in  a  position  to  deliver 
dystuffs  for  the  reason  that  the  chemical  factories  were  over¬ 
whelmed  with  orders  for  explosive  materials.  This  defense 
of  the  German  attitude,  intelligible  especially  from  the  stand¬ 
point  of  importers  here,  had  established  itself  so  well  here,  it 
was  held  up  to  me  among  others,  even  in  the  State  Depart¬ 
ment,  that  without  a  corresponding  counter  statement,  every 
change  of  Germany  in  her  attitude  hitherto  would  have  been 
construed  as  a  disloyal  deception. 

“From  the  objective  point  of  view  there  was  no  objection 
to  the  declaration  in  so  far  as,  in  consequence  of  its  non-obliga- 
tory  wording,  its  execution  depended  from  the  outset  of  the 
free  discretion  of  the  German  government.  In  what  way  I, 

27 


with  such  a  declaration,  went  beyond  the  authority  conferred 
upon  me,  I  am  not  able  to  comprehend.  I  feel  justified  in  re¬ 
garding  it  as  my  task  to  bring  a  communication  ordered  by 
you,  before  the  American  Government  in  that  form  which 
exerts  the  greatest  possible  influence  in  our  favor  on  public 
opinion,  presupposed  that  no  inadmissible  objective  conces¬ 
sions  are  made  thereby.  It  depends  so  much  the  more  on  a 
corresponding  form  since,  as  your  Excellency  knows,  official 
notes  on  the  part  of  the  Germans  are  at  this  time  the  only 
effective  means  of  influencing  public  opinion  in  this  country.  It 
is,  therefore,  of  the  greatest  importance,  that  such  notes  receive 
that  wording  which,  according  to  a  profound  knowledge  and 
appreciation  of  conditions  here,  appears  necessary. 

“(Signed)  Bernstorff.” 

I  think,  gentlemen,  that  I  have  introduced  enough  to  show  to 
you  that  even  prior  to  1916,  the  dye  industries  of  Germany 
were  utterly  and  absolutely  under  the  central  control  of  the 
Government,  and  that  the  central  control  of  the  Government 
was  able  to  use  those  dye  industries  at  will  for  such  Govern¬ 
mental  purposes  as  it  desired. 

It  has  been  shown  here  that  in  1916  they  became  one  great 
trust,  called  the  I.  G.,  and  it  might  be  inferred  that  this  was 
due  to  war  conditions,  but  I  want  to  show  to  you  that  it  was 
but  the  logical  carrying  out  of  a  scheme  long  thought  out,  of 
long  years’  standing,  which  had  for  its  object  the  control  of 
the  world’s  dye  markets  and  through  that  control  of  the 
world’s  dye  markets  the  possible  destruction  or  limitation  of 
all  the  dependent  industries,  not  only  of  this  country,  but  of 
every  country,  to  the  advantage  of  those  industries  as  estab¬ 
lished  in  Germany  itself. 

This  was  wholly  apart  from  her  settled  purpose  that  by 
destroying  the  chemical  industry  of  all  other  nations  she 
sought  to  leave  them  impotent  in  war.  In  1910,  that  farseeing 
and  able  Senator,  the  late  Mr.  Aldrich  of  Rhode  Island,  ob¬ 
tained  the  translation  of  the  principal  authoritative  book  upon 
the  German  banks  and  upon  the  cartel  system.  This  book  was 
entitled,  “The  Great  German  Banks  and  Their  Concentration 
in  Connection  with  the  Economic  Development  of  Germany,” 
by  J.  Riesser,  Geheimer  Justizrat  and  Professor  at  the  Uni¬ 
versity  of  Berlin.  In  order  that  the  country  might  exercise 
prevision,  this  translation,  at  Senator  Aldrich’s  request,  was, 
printed  as  a  Senate  document,  and  is  known  as  Volume  43, 
Senate  Documents,  Sixty-first  Congress,  Second  Session.  In 

28 


this  volume,  at  page  724,  the  author,  after  recounting  the 
combination  into  the  “Big  Six,”  goes  on  to  say : 

“It  is  self-evident  that  this  development  has  not  yet  reached 
its  final  goal.  There  is  even  now  an  agreement  between  the 
Badische  Anilin-und  Sodafabrik  and  the  Hoechst  Dye  Works, 
by  which  they  act  in  common  in  fixing  the  selling  price  of  arti¬ 
ficial  indigo  manufactured  by  both.  It  is  quite  likely  that  the 
Hoechst-Cassella-Kalle  &  Co.  combination  and  the  other  triple 
alliance  (Badische  Anilinfabrik,  Bayer,  and  the  Aktiengesell- 
schaft  fur  Anilinfabrikation)  will  gradually  get  together  in 
one  way  or  another  and  at  some  more. or  less  distant  future 
time  form  a  consolidation  of  all  aniline  dye  works.” 

It  is  our  contention  that  the  general  scheme  of  the  Germans 
was  that  this  supremacy  should  go  on  and  that  it  had  been 
decided  upon  a  long  time  ago,  continued  until  there  was  one 
institution,  namely,  the  I.  G.,  and  that  thereafter,  under  the 
guidance  of  the  I.  G.,  the  chemical  industry  of  Germany, 
supreme  in  the  world,  would  then  become  the  means  of  aiding 
all  other  industries  dependent  upon  dyes  in  Germany  by  with¬ 
holding  from  similar  industries  in  other  countries  the  best 
of  their  dye  products  and  by  favoring  the  home  industries  in 
prices,  or  otherwise,  as  occasion  arose. 

In  other  words,  the  textile  industry  and  all  other  dependent 
industries  are  faced  today  with  a  choice  of  two  licensing  sys¬ 
tems,  one  inaugurated  by  our  own  Government  on  behalf  of 
domestic  dye  manufacturers,  and  the  other  consisting  of  Herr 
von  Weinberg,  the  head  of  the  I.  G.,  working  at  all  times  the 
will  of  his  Government.  There  is  not  a  textile,  carpet,  leather, 
or  other  dye-using  manufacturer  in  this  country,  who  can  today 
receive  one  pound,  except  at  the  personal  behest  of  von  Wein¬ 
berg,  and  except  for  the  protection  he  is  ensured  under  the 
peace  treaty,  which  provides  that  for  a  period  of  five  years  the 
Reparation  Commission  shall  have  an  option  upon  25  per 
cent  of  the  production  of  the  German  works.  The  failure  to 
pass  the  licensing  system  would  allow  Kuttrofif  and  Pickhardt 
and  Metz,  and  the  other  German  agents  to  destroy  the  protec¬ 
tion  of  that  Reparation  Commission’s  agreement,  for  no 
agency  of  the  Government  would  dare  exercise  this  option  if 
they  were  in  danger  of  meeting  the  open  competition  of  Ger¬ 
man  direct  representation  here.  But  if  a  licensing  system  as 
provided  in  the  bill  is  established,  the  Tariff  Commission  can 
act  co-operatively  with  the  Reparation  Commission  and  draw 
the  needs  of  this  country  from  that  supply  until  such  time 
as  our  industry  has  made  itself  100  per  cent  independent. 

I  ask  you,  gentlemen,  to  consider  the  condition  this  country 

29  . 


would  have  been  in  on  that  date  in  1916,  when  all  the  chemical 
industries  of  Germany  were  united  in  the  I.  G.,  if  the  war  had 
not  come  with  its  alarm  and  its  instruction,  through  her 
failure  to  heed  that  warning  of  Senator  Aldrich  in  1910.  But 
the  war,  and  its  consequences,  has  given  us  a  dye  industry 
upon  whose  development  depends  the  extent  of  our  inde¬ 
pendence  and  freedom  from  this  potential  danger.  The  de¬ 
pendent  industries  have  been  short-sighted  in  the  past.  Are 
they  not  all  the  more  so  now,  when,  with  these  facts  before 
them,  they  oppose  the  measures  which  the  dye  industry  claims 
are  necessary  to  its  development?  We  cannot  treat  the  peril 
as  past,  if  any  on  has  attempted  to  do  so,  let  them  contem¬ 
plate  the  following  documents : 

“Kuttroff,  Pickhardt  &  Co.,  Inc. 

“No.  128  Duane  Street 
“new  YORK 

November  22,  1919. 

“Dear  Sirs  : 

“As  considerable  confusion  has  arisen  respecting  the  impor¬ 
tation  of  Indanthrene  and  other  Coal-tar  Dyes,  we  submit  the 
following : 

“It  is  our  understanding  that  the  Government  adheres  to  its 
policy  to  have  no  official  dealings  in  dyes  except  to  the  extent 
that  the  Textile  Alliance  was  made  the  official  agency  to  bring 
over  the  dyes  acquired  through  the  Reparation  Commission. 
After  the  quantity  of  dyes  acquired  through  the  Reparation 
Commission  is  exhausted,  and  further  supplies  are  needed, 
recourse  must  be  had  to  what  may  be  at  the  free  disposal  of 
manufacturers.  The  public  press  has  recently  reported  that 
Dr.  Herty  obtained  an  option  on  Indanthrene  Dyes :  these  re¬ 
ports  are  apparently  erroneous,  and  we  have  today  received 
information  from  abroad  that  no  option  has  been  given  for 
Indanthrene  Dyes.  We  are  in  a  position  to  procure  a  substan¬ 
tial  quantity  of  these  goods,  licenses  were  originally  issued 
to  us,  we  placed  orders  abroad,  and  we  procured  export 
licenses.  However,  in  our  desire  to  accelerate  deliveries  of 
those  dyes  to  our  customers,  we  surrendered  many  export 
licenses  to  the  Textile  Alliance. 

“If  the  full  six  months’  allotment  cannot  be  secured  from  the 
Reparation  Commission,  we  feel  confident  that  the  Textile 
Alliance  will  facilitate  consumers  in  a  readjustment  of  their 
licenses,  in  order  that  they  may  procure  their  pro  rata  share 
of  the  dyes  controlled  by  the  Reparation  Commission,  and  the 
balance  through  us. 


30 


“We  offer  you  our  services  in  this  matter.  Our  charge  will 
be  10  per  cent  commission  on  final  cost. 

“Any  license  plan  will  always  make  for  delay  and  it  is  to  be 
hoped  that  Congress,  which  we  understand  will  take  up  this 
matter  shortly,  will  be  advised  by  consumers  that  license  of 
imports  is  prejudicial  to  th£ir  interests  and  should  not  be 
adopted. 

“It  is  to  be  hoped  that  normal  conditions  may  soon  prevail 
again  and  that  we  may  import  such  goods  as  are  needed  by  the 
Textile  Manufacturers,  keep  them  in  stock  and  meet  require¬ 
ments  promptly. 

Yours,  very  truly, 

“Kuttroff,  Pickhardt  &  Co.,  Inc. 

“(Sgd.)  Fred’k  Kuttroff,  Secy.” 

“November  14,  1919  (X7380) 

“To  Anilfabrik,  Ludwigshafenrheim. 

“We  fully  expect  modification  Government  regulations 
which  will  permit  us  to  confirm  our  orders.  Stop.  This  will 
enable  you  to  maintain  your  position  that  all  goods  to  this 
country  outside  Reparation  goods  should  come  to  us. 

“Purpuring”  (K.,  P.  &  Co.) 

These  documents  show  that  the  methods  of  April  1915,  are 
the  methods  of  today.  We  sought  to  obtain  six  months’  sup¬ 
ply,  which  the  necessities  of  today’s  production  of  the  depen¬ 
dent  industries  demand.  The  I.  G.  does  not  want  this 
licensing  system  passed,  it  therefore  uses  the  strain  upon  the 
industries  to  force  opposition  to  this  system. 

Senator  Nugent.  What  year? 

Mr.  Garvan.  This  year. 

But  at  any  rate  we  did  accomplish  two  things.  We  lent  our 
support  to  the  people  in  Paris  at  the  Peace  Treaty  and  provided 
against  just  that  personal  domination  of  the  German  service.  We 
got  that  by  urging  upon  them  the  agreement  which  is  in  the 
treaty  whereby  for  five  years  the  Allies  have  at  their  disposition 
50  per  cent  of  the  products  up  to  that  date  manufactured  and 
control  over  25  per  cent  to  be  manufactured  during  the  next  five 
years;  because  not  only  we  but  England  and  France  realized  just 
such  things  as  this.  They  realized  that  when  this  cartel  was 
completed  in  1916  it  had  at  its  command  all  government  assist¬ 
ance.  Badische  color  means  color  of  the  royal  family ;  that  they 
were  dependent  entirely  upon  the  will  of  Germany  and  that  it 
was  her  weapon  by  which  she  could  have  forced  any  terms  she 
wanted  to  upon  the  industries  of  any  country. 

31 


We  then  tried  to  get  the  supplies  for  the  people  of  this  country. 

This  story  was  told  by  Dr.  Herty  but  it  has  not  been  told  you. 
He  found  the  dyes  and  we  should  have  the  dyes  on  our  docks 
in  New  York  for  the  relief  of  all  the  industries  of  America. 
You  must  remember  too  that  they  were  asked  to  submit  bids,  it 
was  widespread,  ever)'  need  for  six  months.  The  allocations  were 
made  as  you  all  know.  The  orders  were  sent  over  to  Mr.  Herty, 
and  were  forwarded  to  von  Wienberg.  Everything  was  satis¬ 
factory  until  the  agent  of  von  Weinberg  in  this  country  turned 
the  key  and  America  today  cannot  get  the  dyes  she  needs. 

November  14,  1919,  that  eventful  cablegram  was  sent  which 
I  have  just  read  you,  to  which  came  reply,  “Sorry  we  can’t  renew 
your  option.” 

Senator  Watson.  What  is  the  date  of  that? 

Mr.  Garvan.  November  14,  1919,  this  last  month. 

Senator  Watson.  Do  I  understand  this  was  a  cablegram  sent 
to  this  New  York  firm. 

Mr.  Garvan.  No,  sir;  it  was  sent  to  the  German  firm  by  the 
New  York  firm  of  Kuttroff,  Pickhardt  &  Co.,  Inc. 

Senator  Nugent.  Is  he  one  of  the  Pickhardts  who  testified 
here  yesterday  ? 

Mr.  Garvan.  He  is  related.  There  are  other  cablegrams  which 
went  through  in  code  which  we  have  not  made  out  yet. 

Senator  Watson.  Then  you  interpret  that  between  the  firm 
here  and  the  man  over  there  at  the  head  of  the  establishment,  von 
Weinberg,  an  arrangement  by  which  the  house  here  was  to  be 
the  sole  recipient  of  dyes  coming  to  this  country,  except  what 
actually  were  taken  by  the  Reparation  Commission. 

Mr.  Garvan.  You  see  only  30  per  cent  of  our  needs  we  got 
through  the  Reparation  Commission.  The  other  70  per  cent  Dr. 
Herty  was  to  get  by  means  of  a  written  agreement  with  von 
Weinberg  to  be  furnished  from  the  German  stock. 

Dr.  Herty  returned.  We  met,  tabulated  all  the  needs  of 
America,  and  arranged  the  money  to  pay  for  them  and  arranged 
for  a  system  of  distribution. 

The  K.  and  P.  Company  saw  that  we  were  inaugurating  the  sys¬ 
tem  and  that  it  was  likely  to  be  a  success ;  and  seeing  that  America 
was  about  to  be  free  from  annoyance  as  to  dyes  for  about  six 
months,  they  desired  to  have  the  licensing  system  appear  a  fail¬ 
ure;  sent  that  personal  telegram  and  immediately  back-fired  a 
telegram,  “We  can’t  fill  the  option — the  option  is  not  to  be  ex¬ 
tended.” 

Senator  Watson.  At  the  same  time  did  they  decline  to  send 
these  dyes  through  this  company  to  these  people?  Does  it  pro¬ 
hibit  the  dyes  coming  to  this  country  or  is  the  object  of  this  whole 

32 


thing  on  the  part  of  these  people  here  to  secure  the  sole  agency? 

Mr.  Garvan.  It  is  their  idea  to  deal  through  this  sole  agency. 
As  I  have  shown  by  their  cablegram  of  November  14,  1919,  and 
their  letter  of  November  22,  1919,  they  sought  to  bring  the  sys¬ 
tem  into  discredit  and  to  bring  as  many  of  their  customers,  who 
are  anxiously  waiting  for  these  dyes,  down  before  you  in  con¬ 
demnation  of  this  proposed  licensing  system. 

Senator  Watson.  To  whom  is  that  addressed? 

Mr.  Garvan.  To  the  trade,  I  suppose.  It  says  “dear  sir.” 
It  is  a  circular  I  got,  and  I  think  sent  to  their  customers. 

Now,  gentlemen  of  the  committee,  Senator  Watson  points  out, 
and  I  think  his  question  implies  a  request  for  an  explanation  of 
why  we  are  so  anxious  that  these  importers  be  not  reestablished 
as  the  regular  importers.  That  necessitates  my  telling  you  the 
condition  which  we  found  when  we  went  into  the  dye  factories 
or  dye  agencies  ot  this  country.  They  were  six  in  number.  You 
know  the  six,  Senator  Watson? 

Senator  Watson.  Yes. 

Mr.  Garvan.  Of  that  number,  Berlin  and  Kalle  were  purely 
sales  agents.  I  do  not  believe  they  amounted  to  nearly  as  much 
.as  the  others  in  this  country;  there  was  no  special  evidence  of 
their  activity  except  as  a  part  of  the  group.  They  are  being 
liquidated  because  there  was  nothing  left  but  cash  assets  and 
goods  and  name ;  that  is  all.  They  had  no  manufactories  here. 

The  first  one  and  the  most  important  one  of  these  others  was 
Bayer,  at  the  hand  of  which  was  Dr.  Schweitzer,  Dr.  Hugo 
Schweitzer  we  found  was,  through  the  general  spread  of  these 
agencies,  the  head  of  the  Secret  Service  of  Germany  in  America, 
and  that  the  entire  espionage  and  survey,  practically  of  our  busi¬ 
ness  here  in  America  was  done  through  these  dye  agencies. 

Senator  Calder.  This  man  you  mention,  was  he  of  German 
nationality  ? 

Mr.  Garvan.  He  was  an  American  citizen,  but  I  think  Ger¬ 
man  born,  although  I  will  not  say  about  that.  I  have  a  sketch  of 
him  which  will  show.  Dr.  Schweitzer  had  his  number  from  the 
Secret  Service  in  Berlin,  given  by  the  Imperial  Minister  of  War, 
963,192,637,  in  Berlin. 

It  had  been  the  principle  of  Germany  to  guard  this  industry  as 
she  guarded  her  life.  It  has  been  the  principle  that  nobody  out¬ 
side  of  Germany  should  get  a  toehold  into  ownership  of  any  of 
these  concerns  prior  to  1913,  but  in  the  prosecutions  in  New 
Jersey  under  the  Sherman  anti-trust  law,  it  was  shown  that  they 
were  openly  and  manifestly  agents.  Then  they  were  threatened 
by  prosecution  because  of  connection  with  Germany,  and  doing 
business  with  Germany — and  we  have  all  the  correspondence — 

33 


and  they  sought  by  more  or  less  successful  camouflage  to  set  up 
ownership  by  an  independent  company  in  this  country.  That 
I  show  you  as  the  first  instance  almost  that  we  have  of  their 
actual  disregard  of  any  laws  that  can  be  passed  here  in  America. 
Their  correspondence  will  show  you  at  length  the  brazen  way  in 
which  they  talked  to  their  people  here  of  evading  our  laws. 

You  have  been  told  about  the  question  of  corruption.  To  show 
you  that  the  so-called  reform  in  1913  was  another  conscienceless 
camouflage  just  going  through  the  matter  of  form,  I  desire  to 
read  to  you  one  letter.  It  is  a  letter  from  Dr.  Haeuser  to  Mr. 
Metz,  dated  March  30,  1914.  You  remember  those  settlements 
and  the  payment  of  $40,000  and  all  that  took  place  in  1913, 
and  then  you  recall  how  we  were  told  that  these  people  had  re¬ 
formed  and  started  upon  a  new  regime.  We  find  this  from  Dr. 
Haeuser,  the  same  gentleman  who  has  been  quoted  so  often.  He 
was  the  head  of  Hoechst,  and  also  president  of  the  Society  for 
the  preservation  of  German  business  in  the  world.  Here  is  the 
letter : 

( Translation ) 

“Hoechst  a/Main,  March  30,  1914. 

“My  Dear  Mr.  Metz  : 

“I  received  your  two  favors  of  the  3d  and  13th  of  this  month 
and  assume  that  in  the  meantime  you  received  my  letter  of  the 
6th  of  this  month-.  Your  statements  interest  me  greatly  and 
have  had  my  full  attention  in  every  detail. 

“The  matter  in  regard  to  the  fighting  of  the  graft  money  con¬ 
ditions  seems  now  through  the  foundling  of  the  ‘Textile  Alliance’ 
to  have  found  a  certain  ending,  and  it  seems  to  me  very  proper 
that  you  immediately  sign. 

“For  also  proper  I  consider  your  action  in  refusing  the  ideas 
of  the  U.  S.  Worsted  Company  to  bind  yourself  to  a  conventional 
penalty.  Our  position  so  far  as  the  question  of  new  organization 
you  have  in  the  meantime  learned  out  of  my  writing  of  the  6th 
of  this  month.  I  must  say  that  the  more  I  think  about  the  matter 
the  less  I  can  see  that  with  such  a  re- (new)  organization,  so  far 
as  the  Sherman  law  comes  into  consideration,  can  anything  be 
materially  changed.  Even  a  new  company  would  have  to  stand 
in  the  same  relation  to  us  as  is  the  case  of  the  F.  H.  Comp.  There 
exists  the  fact  that  we  paid  you  $200,000,  and  that  this  payment, 
exactly  as  the  Farbwerke-Hoescht  Comp.,  the  new  company 
would  have  to  give  us  certain  guarantees.  Everything  has  been 
done  to  avoid  any  violation  of  the  Sherman  law,  and  if  Bill  No. 
13,860  which  you  mention  is  passed,  then  it  will  be  clear  that 
even  so  far  as  Indigo  is  concerned  no  violation  against  the  Sher- 


34 


man  law  will  have  taken  place.  (This  refers  to  the  fact  that 
Indigo  was  a  patented  product  and  therefore  the  fixing  of  prices 
would  be  justified.) 

“So  far  as  ‘extras’  are  concerned,  I  am  of  the  opinion  that  this 
practically  amounts  to  simply  a  transition  period  and  that  the 
same  will  rapidly  go  backward.  At  any  rate  all  our  endeavors 
must  be  in  this  direction.  Your  idea  that  the  paying  out  of 
extras  in  future  could  be  done  through  a  third  party  in  cash  as 
for  instance  through  your  carpet  mill  at  Worcester,  I  do  not  find 
happy  (sound.)  You  give  yourself  through  this  into  the  hands 
of  such  third  party  who  could  at  any  moment  turn  against  you. 
To  me  it  seems  the  idea  of  increasing  the  provisions  (commis¬ 
sions)  of  Gagnebin,  Widmann,  etc.,  much  more  right.  Perhaps 
it  would  be  advisable  to  adopt  a  mixed  system  between  the  rais¬ 
ing  of  the  commission  for  Widmann  and  your  former  precedure. 

“It  is  not  quite  clear  to  me  what  difference  there  would  be  in 
the  situation,  if  you  instead  of  one-half  the  dividends  on  the 
business  of  the  Farbwerke,  as  heretofore,  in  future  only  credit 
us  with  one-quarter.  In  reality  at  the  present  time  you  do  not 
credit  the  half  but  you  credit  (send)  us  only,  after  deducting 
the  extras,  the  part  remaining.  This  payment  to  us  is  purely 
your  personal  matter,  has  nothing  whatever  to  do  with  the  F.  H. 
Comp,  and  is  nobody  else’s  business.  It  is  this,  the  compensation 
therefore  we  allowed  a  very  considerable  amount  of  about 
$300,000  for  which  you  bought  the  shares  back,  to  stand  and 
that  we  let  you  privately  participate  in  our  business  with  a  cer¬ 
tain  amount. 

“So  far  as  our  other  agreements  are  concerned,  I  have  no 
objection  to  having  you  send  these  back;  our  entire  relationship 
is  really  a  confidential  relationship  and  it  will  be  and  must  with¬ 
out  agreements  so  continue  in  the  future  as  in  the  past. 

“Regarding  the  charging  of  your  account  in  your  letter  of 
March  3,  page  5,  I  have  to  remark  that  it  is  not  entirely  clear, 
as  in  the  past  year  besides  the  hundred  thousand  dollars  you  also 
according  to  your  letter  of  October  14,  1913,  have  kept  back  a 
further  dividend  of  $50,000  for  extras.  As  you  do  not  mention 
these  last  $50,000  at  all,  so  it  seems  to  me  that  you  already  used 
this  in  the  previous  year  for  extras.  Will  you  please  confirm 
this?  Your  personal  credit  with  the  Farbwerke-Hoescht  Co. 
has  in  the  meantime  also  grown  considerably,  and  it  does  seem 
necessary  that  you  again  bring  this  to  a  balance  as  soon  as  pos¬ 
sible.  I  also  wish  very  much  that  you  might  be  saved  against 
such  losses  like  with  the  Finishing  Co.  in  future. 

“From  the  correspondence  I  also  see  that  the  question  of  the 
payment  of  Hinrich’s  bill  is  not  yet  in  order.  It  seems  to  me 

35 


proper  as  you  at  last  suggest  that  you  pay  the  bill  and  charge  it 
on  extras. 

“I  was  glad  to  learn  that  the  business  is  so  far  satisfactory. 
We  will  have  to  be  satisfied  that  the  profit  on  individual  trans¬ 
actions  will  continue  to  get  smaller  and  that  the  loss  can  only 
be  equalized  through  energetic  work. 

“With  kindest  regards, 

“Yours,  etc., 

(Signed)  “Dr.  Haeuser.” 

P.  S.  To  Mr.  Hein  please  extend  my  best  wishes  for  his 
jubilee. — “H.” 

There  are  other  letters  of  like  effect,  but  I  do  not  think  that 
reading  them  would  add  anything  to  this  matter. 

Senator  Nugent.  What  is  the  significance  of  the  word 
“extras  ?” 

Mr.  Garvan.  Extras  means  money  given  to  the  Dyers. 

Senator  Nugent.  That  is  graft  ? 

Mr.  Garvan.  Yes,  sir. 

Senator  Watson.  That  means  pure  and  simple  graft? 

Mr.  Garvan.  Yes,  sir. 

Mr.  Metz.  I  will  explain  that  after  you  get  through. 

Mr.  Garvan.  I  will  be  very  glad  to  hq.ve  you  do  so,  and  you 
might,  at  the  same  time,  explain  the  letter  of  February  6,  1916, 
from  the  same  man  to  you. 

I  want  to  go  on  with  their  activities  here.  Dr.  Schweitzer,  as 
I  say,  then  became  the  head  of  the  German  Secret  Service  in 
America,  working  through  these  different  agencies.  Dr.  Schweit¬ 
zer  was  the  inventor  of  the  idea  of  buying  the  New  York  Even¬ 
ing  Mail.  Dr.  Schweitzer  was  the  provider  of  funds  for  starting 
the  German  Educational  Union  or  whatever  it  was,  that  dis¬ 
tributed  German  “classics/’  I  have  forgotten  the  title.  Dr. 
Schweitzer  was  the  man  who  met  Dr.  Albert  when  he  arrived 
here.  He  was  the  man  who  furnished  him  his  automobile.  He 
is  the  man  to  whom  Dr.  Albert  turned  over  the  balance  of  his 
funds,  $1,800,000,  on  the  dock  when  he  left.  Dr.  Schweitzer 
spent  millions  of  dollars  in  this  country  in  espionage  and  unlawful 
work.  It  was  perfectly  easy  for  them.  The  money  never  went 
through  Bayer’s  books.  They  had  profits  from  the  China  house, 
and  from  South  American  houses ;  and  profits  came  from  all  over 
the  world  and  was  paid  out  personally,  and  nobody  can  find  a 
book  entry  of  it.  That  amounted  to  some  million  and  a  half 
dollars  a  year  before  we  went  into  the  war.  Dr.  Schweitzer  con¬ 
ducted  the  corner  by  which  he  got  phenol  and  carbolic  acid.  I 
would  like  to  read  you  just  exactly  the  praise  he  got  from  the 

36 


Imperial  Government  of  Germany  on  that  score.  He  made  con¬ 
tracts  for  carbolic  acid  which  the  allies  were  crazy  to  get  for  ex¬ 
plosives,  and  which  was  turned  into  other  lines,  as  Dr.  Bogert 
showed  you  carbolic  acid  could  be  turned  into  for  manufacturing 
other  things,  and  the  effect  of  which  is  best  described  in  Dr. 
Albert’s  praise : 

“The  breadth  of  high-mindedness  with  which  you  at  that  time 
immediately  entered  into  the  plan  has  borne  fruit  as  follows : 
One  and  a  half  million  pounds  of  carbolic  acid  have  been  kept 
from  the  Allies.  Out  of  this  one  and  a  half  million  pounds  of 
carbolic  acid  four  and  one-half  million  pounds  of  picric  acid  can 
be  produced.  This  tremendous  quantity  of  explosives  stuffs  has 
been  withheld  from  the  Allies  by  your  contract.  In  order  to  give 
one  an  idea  of  this  enormous  quantity  the  following  figures  are 
of  interest: 

“Four  million  five  hundred  thousand  pounds  equals  2,250  tons 
of  explosives.  A  railroad  freight  car  is  loaded  with  20  tons  of 
explosives.  The  2,250  tons  would,  therefore,  fill  112  railway  cars. 
A  freight  train  with  explosives  consist  chiefly  of  40  freight  cars, 
so  that  the  4,500,000  pounds  of  explosives  would  fill  three  rail¬ 
road  trains  with  40  cars  each. 

“Now  one  should  picture  to  himself  what  a  military  coup  would 
be  accomplished  by  an  army  leader  if  he  should  succeed  in 
destroying  three  railroad  trains  of  forty  cars,  containing  four  and 
a  half  million  pounds  of  explosives. 

“Of  still  greater  and  more  beneficial  effect  is  the  support  which 
you  have  afforded  to  the  purchase  of  bromine.  We  have  a  well 
founded  hope  that,  with  the  exclusion  of  perhaps  small  quantities, 
we  shall  be  in  a  position  to  buy  up  the  total  production  of  the 
country.  Bromine,  together  with  chloral,  is  used  in  making  nitric 
gases,  which  are  of  such  great  importance  in  trench  warfare. 
Without  bromine  these  nitric  gases  are  of  slight  effect;  in  connec¬ 
tion  with  bromine,  they  are  of  terrible  effect.  Bromine  is  pro¬ 
duced  only  in  the  United  States  and  Germany.  While,  there¬ 
fore,  the  material  is  on  hand  in  satisfactory  quantities  for  the 
Germans,  the  Allies  are  entirely  dependent  upon  importation  from 
America.” 

Senator  Nugent.  What  are  you  reading  from? 

Mr.  Garvan.  I  am  reading  from  Dr.  Albert’s  letter  to  Dr. 
Schweitzer  praising  him  for  his  accomplishment  in  this  matter. 
This  happens  to  be  in  printed  form,  which  I  am  using  for  con¬ 
venience,  but  I  have  the  letter. 

These  are  only  a  few  of  the  activities  of  these  agencies,  I  might 
go  through  them  all — well,  it  is  of  no  use,  because,  as  I  said,  it 
does  not  get  us  anywhere.  But,  I  tell  you,  this  was  the  whole 

37 


structure  of  the  espionage,  and  I  have  books  on  it.  There  is  not 
a  phase  of  commercial  life  that  these  agencies  over  here  would 
not  make  weekly  and  monthly  scientific  and  careful  reports  to 
Germany  on.  They  were  soldiers  in  the  Army  of  Germany.  The 
intent  of  Germany,  of  the  great  chemical  industry,  was  carried  out 
by  them.  If  they  have  changed,  of  course,  we  are  all  grateful ; 
but,  I  will  say,  if  they  have  changed  they  will  not  continue  to  be 
agents  for  I.  G.,  because  the  I.  G.  has  not  changed,  nor  has  its 
purposes  changed,  which  are  to  control,  as  far  as  they  can,  the 
industry  of  the  world. 

Now,  I  want  to  show  you  just  how  that  affects  the  situation 
here.  You  ask  why  a  high  protective  tariff  would  not  be  sufficient. 
As  I  have  told  you,  there  is  a  certain  necessity  for  dyes  in  this 
country  today,  without  the  shipment  that  is  coming  over,  that  is 
acute  in  some  lines.  I  mean  in  some  colors.  Manufacturers  feel 
that  strain  and  are  bringing  pressure  to  bear  to  get  them,  as  far 
as  they  can.  That  necessity  is  only  in  diminished  degree  the 
same  necessity  created  in  1915.  No  matter  how  high  you  put  the 
tariff  it  is  within  the  power  of  the  representatives  of  I.  G.  here 
to  go  out  to  the  people  in  these  industries  that  are  under  strain, 
and  state  the  necessity  for  these  specific  colors,  and  say  to  them : 
Yes,  we  have  got  the  color  that  you  need,  that  you  must  have,  or 
your  factory  will  close,  but  we  will  not  give  it  to  you  unless  you 
make  a  ten  years’  contract  with  us.  It  is  within  their  power  to 
say:  We  will  not  give  you  this  dye  unless  you  take  all  of  your 
supplies  from  us,  and  make  a  five-year  or  a  ten  years’  contract 
with  us  for  all  your  dyes. 

You  know  that  the  country  needs  vat  dyes  badly  today.  You 
know  that  Mr.  du  Pont  is  about  to  relieve  that  necessity,  but  it 
will  possibly  be  a  month  or  two  or  possibly  three  months,  before 
the  full  capacity  of  the  country  will  be  relieved,  whereas  these 
mills  using  them  need  them  today.  Isn’t  it  within  the  power  of 
the  representatives  of  the  I.  G.  to  go  to  them  and  say,  Yes,  we 
will  relieve  that  necessity,  but  only  on  condition  that  you  make  a 
long  term  contract  with  us  for  all  of  your  vat  dyes — 

Senator  Nugent  (interposing).  Where — 

Mr.  Garvan  (continuing).  One  moment.  I  will  prove  it  by 
their  own  documents.  Where  would  Mr.  du  Pont  be  with  his 
large  investment  and  earnest  effort  when  he  came  out  three 
months  hence?  He  would  find  that  the  markets  of  America  had 
been  foreclosed  against  him.  Would  they  do  anything  like  that? 
The  question  is  answered  by  the  fact  that  they  have  done  things 
like  that.  I  will  show  it  to  you — 

Senator  Nugent  (interposing).  May  I  interrupt  you  right 
there  ? 

Mr.  Garvan.  Yes. 


38 


Senator  Nugent.  To  whom  do  you  refer  when  you  speak  of 
the  agents  of  I.  G.  ? 

Mr.  Garvan.  We  have  only  seen  two  of  them  here,  Mr.  Metz 
and  Mr.  Pickhardt.  I  think  they  have  both  frankly  admitted 
that  they  represent  one  Hoechst  and  the  other  Badische. 

Senator  Nugent.  You  refer,  then,  to  agents  in  this  country 
handling  German  dyes  manufactured  by  these  six  German  estab¬ 
lishments,  do  you? 

Mr.  Garvan.  Yes  sir ;  which  are  now  one. 

Senator  Nugent.  I  understand. 

Mr.  Garvan.  You  remember  that  indigo  was,  first,  a  German 
monopoly.  And  then  England  learned  to  make  indigo  and  then 
Swizterland  learned  to  make  indigo.  Let  us  see  how  Germany 
protected  themselves  against  possible  competition  there: 

“Hoechst  a/m.,  Sept.  20,  1919. 

“Indigo  Convention. 

“Very  Confidential. 

“For  the  purpose  of  rendering  more  difficult  any  competition 
that  might  develop,  towards  the  business,  the  customers  should 
now  be  notified  that  they  should  make  their  contracts  for  supplies 
now — for  a  period  of  2  years  and,  of  course,  at  prices  with  dis¬ 
count  allowances,  which  depend  upon  the  2-year  quantity  amount. 

“Customers  who  get  a  twenty  per  cent  discount  on  an  order 
of  5,000  Ko.  per  year,  will  get  the  benefit  of  the  10,000  Ko.  prices, 
with  a  two-year  contract,  for  10,000  Ko.  at  twenty  per  cent  off, 
also  those  whose  order  now  amounts  of  2,500  Ko.  per  year  on 
which  they  get  twenty  per  cent — will  get  the  5,000  Ko.  prices  on 
a  two  years’  contract,  less  twenty  per  cent — and  those  firms  whose 
yearly  consumption  only  amounted  to  a  few  casks  per  year — if 
they  sign  a  contract  for  at  least  1,000  Ko.  for  two  years — twenty 
per  cent — will  enjoy  the  1,000  Ko.  prices. 

“In  the  case  of  larger  contracts,  the  advantage  will  lie  in  the 
granting  of  a  larger  discount” — I  am  afraid  that  Mr.  Metz  was 
reminiscent — "according  to  the  quantities  contracted  for.  For 
example,  customers  whose  early  needs  amount  to  15,000  Ko:  at 
twenty  per  cent  and  who  can  now  close  a  two-year  contract  for 
30,000  Ko.,  twenty  per  cent — will  enjoy  the  benefit  of  an  extra 
one  per  cent,  as  well  as  those  firms  who  will  now  close  a  50,000 
Ko.  twenty  per  cent  contract,  instead  of  a  25,000  Ko.  twenty  per 
cent  contract,  will  enjoy  the  benefit  of  an  extra  two  per  cent  in¬ 
stead  of  one  per  cent,  etc. 

“Furthermore,  the  following  circumstances  have  been  provided 
for: 

“1.  The  increase  of  a  contract,  should  now,  as  heretofore,  only 

39 


start  6  months  from  the  date  of  the  conclusion  of  the  contract. 
The  contingency  of  a  two-year  contract  can,  therefore,  also  be 
extended  to  cover  a  now  existing  contract,  in  the  case  of  those 
consumers  whose  six  months  time  period  has  not  yet  expired. 

“2.  It  is  allowed,  even  if  the  amount  of  the  contract  has  not 
been  entirely  taken  up  after  the  expiration  of  the  first  year’s  con¬ 
sumption  of  the  quantities  contracted  for,  in  as  far  as  they  are 
entitled  to  a  discount,  to  grant  the  discount  due  on  them. 
Examples.  A  customer  who,  up  to  date,  used  50,000  Ko.  twenty 
per  cent  per  year,  closes  a  two-year  contract  for  100,000  Ko. 
twenty  per  cent,  and  has  accordingly  the  right  to  a  three  per  cent 
discount. 

“Consequently  after  taking  50,000  Ko.  twenty  per  cent,  he 
should  be  entitled  to  calculate  a  two  per  cent  discount,  while  he 
will  enjoy  three  per  cent  upon  the  delivery  of  a  further  50,000  Ko. 
twenty  per  cent,  and  upon  the  first  half  of  the  remainder,  one 
per  cent. 

“It  is  understood  that,  even  though  he  gets  the  discount  accru¬ 
ing  to  the  quantities  already  delivered,  before  the  settlement  of 
the  entire  contract,  he  is  not  relieved  from  his  obligation  to  take 
the  remainder  of  the  amount  which  he  pledged  himself  to  take. 

“3.  Customers  must  close  a  contract  for  the  whole  quantity 
which  comprises  their  normal  consumption  for  two  years,  how¬ 
ever,  they  are  permitted  to  increase  same,  within  six  months  from 
the  date  of  the  contract,  in  the  event  that  they  think  that  they 
will  require  a  larger  quantity  than  that  for  which  they  contracted. 

“4.  On  the  other  hand  it  is  not  allowed  that  a  customer  who 
only  arranged  for  a  small  quantity,  as  his  total  consumption  for 
two  years,  or  only  closed  a  contract  for  a  one  year  supply,  should 
later  be  permitted  to  increase  same. 

“5.  The  prolongation  of  the  period  of  time  for  ordering,  pro¬ 
vided  for  thus  far,  being  three  months,  it  also  remains  in  force 
for  two-year  contracts;  therefore,  as  if  the  order  period  were 
actually  two  and  one-quarter  years. 

*  *  *  *  *  * 

“6.  The  amounts  contracted  for  must  be  accepted,  under  all 
circumstances,  within  the  period  of  time  arranged  for  their 
delivery,  and  an  extension  of  the  duration  of  the  delivery  time, 
with  the  exception  of  the  above-mentioned  three  months,  cannot 
be  considered  any  more. 

“To  provide  for  such  customers  whose  two-year  consumption 
will  be  larger  than  was  provided  for  in  the  previously  planned 
scale,  and  to  encourage  them  to  make  such  large  contracts  now, 
for  two  years,  the  discount  scale  continues  as  follows : 

40 


To  be  discounted 

“For  contracts  of  300,000  Ko.  20  c/c  in  2  yrs.  6  0/0 — to  be  discounted. 
“For  contracts  of  450,000  Ko.  20  c/c  in  2  yrs.  6  1/2 — to  be  discounted. 
“For  contracts  of  600,000  Ko.  20  c/c  in  2  yrs.  7  0/0. 

“For  contracts  of  900,000  Ko.  20  c/c  in  2  yrs.  7  1/2 — to  be  discounted. 

“Very  truly, 

“Hauser.” 

“Dealers  and  exporters  are  prohibited  from  enjoying  the  afore¬ 
mentioned  advantages.” 

Senator  Watson.  What  are  you  reading  from? 

Mr.  Garvan.  A  letter  from  Hoechst  to  the  Metz  Agency  in 
America,  to  their  agency  here. 

Senator  Watson.  When  was  that  written? 

Mr.  Garvan.  In  1909. 

Senator  Calder.  Ten  years  ago? 

Mr.  Garvan.  Yes,  sir. 

Now,  in  1913,  we  carried  it  right  down  to  date;  in  1913,  when 
the  prosecutions  in  this  country  threatened  the  indigo  convention 
as  being  against  the  Sherman  anti-trust  law,  and  to  show  you  of 
what  value,  for  instance,  your  laws  may  be  which  might  be  passed 
unless  they  take  into  consideration  the  history  of  the  people  whom 
you  are  trying  to  protect  against.  Let  me  show  you  what  hap¬ 
pened  after  they  were  prosecuted  under  the  Sherman  anti-trust 
law: 


“Farbwerke  vorm  Meister  Lucius  &  Bruning 
“Hoechst  am  Main 

“September  3,  1913. 

“Confidential 

“Indigo  Convention,  America. 

“Taking  into  consideration  our  various  verbal  discussions  of 
this  affair  we  inform  you  that  our  patent  lawyer  in  the  United 
States  has  entirely  changed  his  view  of  the  whole  situation  after 
another  thorough  examination.  He  now  believes  that  one  cannot 
exonerate  the  upholding  of  the  common  sales-prices  in  the  exist¬ 
ing  patent  situation,  that  it  has  to  do  with  a  patented  article.  We 
are  then  in  the  same  position  regarding  indigo,  as  toward  the  other 
conventions. 

“Unquestionably  the  conditions  are  not  so  advantageous  in  any 
convention  as  in  the  indigo  convention,  and  in  case  of  an  attack, 
much  could  be  said  in  favor  of  the  same.  Our  lawyers  have 
pointed  out,  after  taking  into  consideration  all  the  arguments 
which  can  be  brought  up,  that  the  indigo  convention  also  would 
fall  under  the  Sherman  law,  because  it  is  certain  that  the  indigo 

41 


prices  over  there  would  be  cheaper  than  they  are  now,  if  no 
understanding  between  our  two  firms  existed. 

“Since  the  indigo  convention  has  already  often  been  introduced, 
especially  in  the  newspapers  and  in  legal  dealings,  we  are  of  the 
opinion  that  we  should  not  hesitate  to  suspend  the  price  agree¬ 
ment  for  America.  Since,  however,  in  this  convention,  only  our 
two  firms  come  into  consideration,  we  believe  that  it  will  be  pos¬ 
sible  to  take  certain  preventive  measures,  so  that  a  sharp  com¬ 
petitive  struggle  shall  not  ensue,  which  would  surely  be  only  to 
the  disadvantage  of  our  common  interests. 

“We  allow  ourselves  to  offer  you  the  following  suggestions — 

And  that  was  to  take  the  three  names  mentioned,  and  which  a 
while  ago  I  did  not  mention,  which  took  a  large  part  of  the  indigo 
production  at  that  time,  and  go  to  them  and  make  special  terms. 
*  *  *  *  * 

— “So  to  acquire  a  certain  assurance  in  this  direction,  we  sug¬ 
gest  that  each  firm  shall  place  at  the  disposal  of  their  sales  houses 
that  quantity  that  they  delivered  over  there  last  year,  with  5 
per  cent  added,  for  this  and  for  the  coming  year.  Since  1912 
was  a  good  year,  and  a  margin  of  still  5  per  cent  is  planned,  this 
quantity  will  not  be  too  scant,  should  the  total  sale,  however,  rise 
still  more,  it  can  always  be  raised,  as  we  can  exchange  figures 
quarter-yearly,  and  control  the  stock. 

“In  this  manner  it  can  be  arranged  that  no  salesman  must 
refuse  indigo  to  a  customer  whom  he  is  serving  at  the  time,  and 
on  the  other  hand,  that  he  does  not  control  so  much  goods,  that 
by  price-swinging  he  can  force  possession  of  that  of  the  others. 
Furthermore,  it  should  be  explained  to  the  sales  houses  that 
we  can  not  as  yet  book  sales  to  them  dating  after  1916,  and  that 
they,  should  they  once  be  able  to  do  business,  for  which  they 
desire  goods  after  this  date,  must  notify  us  here  beforehand,  we 
would  then  have  to  reach  an  understanding  among  ourselves. 

“We  are  looking  forward  to  your  reply,  whether  you  agree 
to  these  suggestions. 

Yours,  truly, 

“Badische  Anilin  &  Soda  Fabrik  Rumph. 

Senator  Nugent.  By  whom  is  that  letter  signed? 

Mr.  Garvan.  The  Badische  people,  and  it  is  to  Kuttroff, 
Pickhardt  &  Co. 

Then,  under  date  of  June  13,  1914,  they  write: 

“Ludwigshafen  write  under  date  of  June  13,  1914. 

“Indigo  Price  Reduction. 

“We  refer  to  our  respects  of  even  date  to  the  Badische  Com¬ 
pany  regarding  cost  prices  of  indigo. 


42 


“For  your  information  we  are  sending  you  a  German  circular, 
together  with  the  supplement,  ‘Technik,’  etc.,  in  order  that  you 
may  conceive  the  idea  how  we  carry  into  effect  the  price  reduc¬ 
tion  in  this  country. 

“The  Badische  Co.  advised  us  in  memo,  of  May  26  (I.  730) 
that  Kilpstein  made  trial  deliveries  of  from  50  to  100  bbls.  to 
the  Amoskeag  Mfg.  Co.,  Bliss  Fabyan  &  Co.,  and  the  American 
Printing  Co.  Such  large  quantities  can  hardly  be  called  trial  lots. 
It  goes  to  show  that  these  firms  do  not  consider  themselves 
obliged  to  take  their  entire  requirements  from  us  and  from 
Hoechst.  It  will,  therefore,  be  necessary  to  watch  these  firms 
closely  and  we  hope  that  in  future  you  will  succeed  in  keeping 
Klipstein  away  from  these  consumers.” 

How,  they  were  going  to  do  it  we  will  show  you  in  a  moment ; 
how  they  were  going  to  break  it  up. 

“The  considerable  reduction  of  the  ‘R’  sorts,  especially  of 
‘R  B/  is  thought  of  as  a  measure  of  competitive  struggle  against 
Hydron  Blue.  We  refer  to  the  German  circular  we  are  also 
sending  you,  which  contains  all  the  necessary  information.  We 
request  an  early  report  regarding  the  prospects  with  the  new 
prices  at  the  Amoskeag  MJg.  Co.  (combination  of  ordinary  indigo 
plus  indigo  R  B)  and  it  will  also  interest  us  to  know  if  there  are 
any  prospects  at  the  American  Printing  Co.,  of  introducing 
indigo  R  B  D  in  place  of  Hydron  Blue  2  B. 

“We  were  unable  to  make  arrangements  with  Hoechst  for  the 
carrying  out  of  the  price  reduction  and  the  renewal  of  the  con¬ 
tracts  in  the  United  States,  as  it  is  well  known  that  this  is  not 
admissible.  We  only  have  come  to  the  agreement  that  each 
firm  should  advise  their  respective  American  friends  that  it 
would  be  in  the  interest  of  the  indigo  business,  if  they  also 
were  to  make  the  reduction  in  the  selling  prices,  that  is,  cor¬ 
responding  to  the  reduction  in-  the  cost  prices : 

“1  ct.  on  the  selling  price  for  the  ordinary  sort  indigo. 

“2  cts.  on  the  selling  price  for  the  ordinary  ‘R’  sorts. 

“There  is  no  change  in  the  situation  as  talked  over  with  you 
last  January,  viz.,  there  is  no  intention  to  increase  the  sales  by 
underselling  at  the  expense  of  Metz.” - 

I  will  show  you  the  two  sides  of  this  picture — one  writing  to 
Metz  and  the  other  writing  to  Kuttroff,  Pickhardt  &  Co. : 

- “Of  course  you  must  also  look  out  that  Metz  acts  in  the 

same  manner  and  does  not  disturb  our  possessions.  Our  request 
at  the  time,  not  to  make  new  contracts  extending  later  than  1916, 
naturally  is  today  invalid.  We  hope  that  this  time  the  campaign 
of  renewal  of  contracts  will  wind  up  without  incidents,  in  order 
that  you  as  well  as  Metz  may  retain  each  one’s  possessions.” 


43 


That  is  how  Badische  treated  it.  Now,  how  did  Hoechst 
treat  it : 

“Hoechst  a/M.,  June  8,  1914. 

“Strictly  Confidential. 

“My  Dear  Mr.  Metz  : 

“Herewith  I  am  notifying  you,  in  strictest  confidence,  that  we 
have  decided  upon  a  change  in  the  price  of  indigo.  An  official 
letter  to  you  from  the  Farbwerke,  and  from  the  Badische  to  Mr. 
Kuttroff,  goes  off  by  mail  at  once. 

“Both  letters,  the  wording  of  which  were  not  previously  ar¬ 
ranged,  go  off  on  the  same  steamer,  so  that  every  one  will  be  in¬ 
formed  simultaneously.  I  will  wire  the  name  of  the  steamer  to 
you  in  plenty  of  time  so  that  you  can  prepare  yourself  and  so 
manage  that  you  can  go  out  and  approach  the  indigo  consumers 
immediately  upon  receipt  of  the  letter  and  to  try,  on  this  occas- 
sion,  to  win  over  something  from  the  Badische  trade  for  our 
goods,  by  means  of  a  new  settlement. 

“As  per  our  arrangement  with  the  Badische  over  here,  the  new 
price  is  only  to  be  granted  to  those  customers  who  make  a  new 
four-year  contract. 

“This  contract  can  be  made  with  the  present,  or  if  the  cus¬ 
tomer  wishes  to  change,  also  with  a  new  indigo  contractor,  and 
in  the  latter  case  the  present  contractor  must  deliver  the  rest  of 
the  old  contract  at  the  new  price  and  may  not  make  a  new  con¬ 
tract  at  a  lower  price,  the  condition  for  a  concession  on  the  price 
of  the  rest  of  the  present  contract. 

“Consequently,  the  new  price  is  only  granted  to  consumers 
after  they  have  made  a  new  four-year  contract,  either  with  the 
old  or  with  a  new  purveyor.  Whoever  makes  no  new  contract 
must  continue  to  pay  the  old.” - 

You  will  note  that  it  says - 

“This  information  is  strictly  confidential  and  you  must  attempt 
nothing  until  the  official  letter  is  in  your  possession.” 

I  have  here  a  number  of  letters  which  are  interesting,  I  should 
say,  alone  to  the  committee,  because  they  bear  upon  the  way 
these  people  have  attempted  to  influence  legislation  in  the  past. 
They  show  something  that  is  only  just  for  the  committee’s  con¬ 
sideration  as  to  the  process.  It,can  be  placed  in  the  record,  but 
I  do  not  see  any  particular  point  in  reading  them  out  here  at  this 
time. 

Senator  Curtis.  Submit  such  of  them  as  you  think  ought  to 
be  printed. 

Mr.  Garvan.  I  will  submit  them  for  the  committee. 

Senator  Curtis.  You  do  not  care  to  have  them  printed  in  the 
record  ? 


44 


Mr.  Garvan.  Oh,  I  do  not  care.  It  is  submitted  for  the  com¬ 
mittee’s  consideration. 

Senator  Curtis.  You  may  submit  for  the  information  of  the 
committee  anything  that  you  wish  us  to  look  over. 

Mr.  Garvan.  All  right. 

It  has  been  the  regular  course  for  them  to  bring  pressure  upon 
consumers  who  are  suffering  and  who  come  in  all  innocence  to 
bring  pressure  to  bear  upon  you.  It  is  my  contention  that  it  is  a 
most  short-sighted  policy  to  let  the  inconveniences  of  the  licens¬ 
ing  system,  which  are  at  their  peak  now,  and  we  are  providing  for 
a  six-month’s  supply,  and  Kuttroff,  Pickhardt  &  Company  will 
have  to  take  back  that  telegram  when  protest  is  made  to  the 
State  Department — interfere  with  our  proper  consideration  of 
this  matter  now.  And  some  way  or  other,  when  some  form  of 
peace  treaty,  which  some  day  may  be  made,  there  is  no  question 
about  these  provisions  being  in  the  treaty;  in  fact,  I  think  your 
own  Finance  Committee  stated  that  so  far  as  these  branches  of 
the  peace  treaty  are  concerned,  there  is  no  question  about  them. 

Senator  Watson.  Have  you  canceled  these  licenses? 

Mr.  Garvan.  No ;  these  licenses  are  in  the  hands  of  the  Textile 
Alliance,  and  they  are  waiting  to  hear — until  Weinberg  withdraws 
his  refusal  to  fulfill,  which  he  undoubtedly  will  have  to  do. 

Senator  Watson.  Have  any  licenses  been  granted  to  im¬ 
porters  which  have  been  cancelled? 

Mr.  Garvan.  You  will  have  to  ask  the  State  Department. 

As  I  started  to  say,  we  are  at  the  peak  of  the  inconveniences 
of  the  licensing  system.  As  I  explained  to  you,  these  gentlemen 
can  go  out  into  the  country  and  work  upon  the  necessity  of  the 
consumers  of  dyes.  There  is  one  point  that  I  did  not  make  clear : 
if  there  are  twenty  great  consumers  of  dyes,  and  take  the  men¬ 
tion  of  the  shirt  makers,  who  are  in  distress,  there  is  no  question 
about  that;  and  if  one  mill,  which  is  dyeing  for  shirts  is  short  of 
dyes,  and  if  these  agents  go  to  them  and  get  them  to  consent  to 
make  a  ten-year  contract  in  order  to  rely  upon  the  fact  that  they 
will  get  these  dyes,  they  then  compel  the  other  nineten  mills  to 
make  a  similar  contract,  because  then  they  will  be  able  to  put 
goods  upon  the  market,  tomorrow  say,  which  their  rivals  cannot 
compete  with.  The  industry  must  advance  together.  Therefore, 
in  no  time  the  whole  twenty  would  be  compelled,  for  their  business 
safety,  to  make  the  same  form  of  contract.  That  opens  the  mat¬ 
ter  for  full  line  forcing.  Upon  a  high  tariff  they  can  work  upon 
the  necessities  of  this  leather  man  or  that  leather  man,  or  this 
textile  manufacturer  or  that  textile  manufacturer,  and  can  say: 
“We  will  not  give  you  this  dye  unless  you  let  us  furnish  you 
entirely.” 


45 


Gentlemen  of  the  committee,  you  can  pass  all  the  laws  you 
want  to  pass,  and  make  them  mountain  high,  and  it  will  not  reach 
the  situation.  The  agent  can  say:  “I  have  not  enough  dye.  I 
have  only  enough  for  those  people  who  buy  all  their  dyes  from 
us.”  Is  that  a  crime?  On  the  other  hand'  if  there  is  some  system 
by  which  the  market  of  America  may  be  open  for  the  investor 
who  has  invested  his  money  and  made  a  dye,  that  is  all  we  are 
after.  What  the  method  is,  I  do  not  think  anybody  cares. 

There  are  just  one  or  two  other  points  I  want  to  make:  I 
want  to  reiterate  the  fact  that  we  are  under  a  licensing  system 
from  Germany  now,  and  will  be  until  we  receive  our  independ¬ 
ence  due  to  dye  manufacture  here. 

Senator  Calder.  Has  it  been  the  practice  of  German  manu¬ 
facturers  to  make  contracts  as  long  as  ten  years?  You  spoke  of 
long  contracts. 

Mr.  Garvan.  I  read  one  that  was  four  years,  and  that  is  all  I 
know. 

Mr.  Metz.  That  is  the  only  one,  as  to  indigo. 

Mr.  Garvan.  It  is  their  practice  to  make  them  long  apparently ; 
and  if  the  necessities  of  the  situation  and  their  own  interest 
demand,  no  doubt  they  will  make  them.  Ten  years  as  stated  by 
me  was  only  a  figure  of  speech. 

Senator  Nugent.  It  would  be  to  their  advantage  to  do  it, 
wouldn’t  it? 

Mr.  Garvan.  Certainly. 

Senator  Nugent.  Under  existing  conditions,  more  particu¬ 
larly? 

Mr.  Garvan.  Yes. 

Senator  Calder.  If  they  could? 

Mr.  Garvan.  They  could  if  one  mill  out  of  twenty  gave  way, 
for  the  rivals  of  that  mill  would  have  to  go  to  them.  Otherwise, 
they  would  put  goods  on  the  market  dyed  with  a  better  dye,  and 
the  others  would  have  to  go  to  it.  And  then  the  other  nine¬ 
teen  would  have  to  contract  for  their  dyes,  and  if  they  demanded 
ten  years’  contracts  they  would  have  to  make  them. 

I  have  only  touched  upon  the  position  and  the  activities  of 
these  chemical  organizations  which  came  before  us  during  the 
last  period  of  two  years,  and  it  was  a  realization  of  those  con¬ 
ditions  which  led  us  to  form  The  Chemical  Foundation,  which 
led  us  to  see  the  necessity  of  taking  over  these  American  patents, 
because  they  had  never  been  used  as  anything  but  weapons  against 
America.  If  we  gave  them  to  the  public  they  would  not  be  any 
protection,  there  would  be  nobody  to  look  after  their  infringe¬ 
ment  by  the  Germans  after  the  war.  There  was  no  way  by  which 
we  could  give  them  to  any  public  organization  or  department  of 

46 


the  Government.  We  had  it  looked  into  carefully  by  Judge 
Gray,  of  Delaware,  and  after  full  consideration,  we  had  The 
Chemical  Foundation  formed.  As  a  quasi  public  institution,  as 
nearly  public  institution  as  possible,  under  the  control  of  trustees, 
and  Senator  Calder  can  speak  for  the  standing  of  Mr.  Dodge, 
Mr.  Bannard  and  Judge  Ingraham,,  and  the  other  that  men  of 
high  type,  who  have  achieved  their  ambitions  in  life  and  who 
could  not  possibly  use  it  for  themselves.  There  is  nothing  in 
the  books  of  the  organization  which  this  committee  cannot  see 
for  themselves,  or  cannot  send  anybody  else  to  see  for  them. 
Senator  Watson  asked  if  there  was  the  possibility  if  the  trustees 
went  crooked,  or  the  officers  went  crooked,  that  it  might  get  into 
bad  hands  and  become  a  monoply.  No,  gentlemen,  there  will  be 
500  stockholders,  composed  of  the  smartest  and  ablest  business 
firms  in  America.  There  are  137  now,  whose  names  I  will  offer 
to  you  to  be  inserted  in  the  record,  and  500  of  the  biggest  firms 
and  organizations  in  America  will  be  in  it,  each  one  owning  one 
share  of  stock  in  the  Chemical  Foundation,  and  everything  will 
be  under  the  protection  of  the  advisory  committee.  For  instance, 
in  dyes,  all  the  dye  manufacturers  will  be  interested,  with  a  dye 
manufacturing  committee.  In  drugs,  all  of  the  drug  manufac¬ 
turers,  which  will  have  a  drug  manufacturing  committee.  In 
chemicals  it  will  be  the  same. 

The  papers  submitted  by  Mr.  Garvan  is  here  printed  in  full 
in  the  record,  as  follows  : 

List  of  the  Stockholders  of  the  Chemical  Foundation,  Inc. 

The  Abbott  Laboratories. 

Althouse  Chemical  Company. 

The  Aluminum  Company  of  America. 

American  Aniline  Products. 

American  Cellulute  and  Chemical  Mfg.  Co. 

American  Chemical  Society. 

American  Cotton  Oil  Company. 

American  Platinum  Works. 

American  Printing  Company. 

Aniline  Dye  and  Chemical  Company,  Inc. 

Arnold  Print  Works. 

Armour  Fertilizer  Works. 

Astinook  Company. 

Atlantic  Dyestuff  Company. 

F.  E.  Attaeus. 

Ault  &  Wiborg. 

Baker  and  Company,  Inc. 

H.  J.  Baker  Brothers. 

George  A.  Ball. 


47 


Joseph  Bancroft  Sons. 

Barrett  Company. 

Bayer  and  Company. 

Bethlehem  Steel  Company. 

Bishchoff  and  Company. 

Borne-Serymser  Company. 

H.  Bower  Chemical  Company. 

Bronx  Company. 

Butterworth  Judson  Corporation. 

John  Campbell  and  Company,  Inc. 

Capudine  Chemical  Company. 

Central  Dyestuff  and  Chemical  Company. 

Antoni  Chapel. 

Cheney  Brothers. 

Titro  Chemical  Company. 

R.  H.  Comey  and  Company. 

Commercial  Research  Company. 

Consolidated  Color  and  Chemical  Company. 

Contact  Process  Company. 

Crocker  Burbank  and  Company. 

Samuel  A.  Crozer. 

John  C.  Dehls. 

Diamond  Alkali  Company. 

Dicks-David  Company. 

Digestive  Fermints  Company. 

John  M.  Dorr. 

Dow  Chemical  Company. 

E.  I.  DePont  de  Nemours  Company. 

Winthrop  C.  Durfee  Dye  Products  and  Chemical  Company. 
Eastern  Drug  Company. 

Electric  Boat  Company. 

Electro  Bleaching  Gas  Company. 

Charles  Engelhardt. 

Essankay  Products  Company 
Essex  Aniline  Works. 

General  Bakelite  Company. 

General  Ceramics  Company. 

General  Chemical  Company. 

Genessee  Pure  Food  Company. 

Grasselli  Chemical  Company. 

Hanovia  Chemical  Company.  * 

Hardwick  and  Magee  Company. 

Heller  and  Merz. 

Hercules  Powder  Company. 

Hess  and  Goldsmith. 


48 


Heyden  Chemical  Company. 

Hooker  Electro  Chemical  Company. 

Irvington  Smelting  and  Refining  Works. 

Isco  Chemical.  Company. 

Johnson  and  Johnson. 

Kelly  Springfield  Company. 

E.  C.  Klipstein. 

Walter  E.  Knipe  and  Sons. 

La  Belle  Iron  Works. 

Lackawanna  Steel  Company. 

Lehn  and  Fink. 

Lewiston  Bleaching  and  Dye  Works. 

Eli  Lily  Company. 

Lindsay  Light  Company. 

Lonsdale  Company. 

Lowell  Bleachery. 

John  Lucas  and  Company,  Inc. 

Mallinchrodt  Chemical  Company. 
Marden-Orth  and  Hastings. 

Francis  P.  Maxwell. 

Merck  and  Company. 

William  S.  Merrill  and  Company. 

Merrimac  Chemical  Company. 

Metals  Disintegrating  Company. 

H.  A.  Metz  Laboratories,  Inc. 

George  L.  Gilmore. 

Millville  Manufacturing  Company. 

Monroe  Drug  Company. 

Monsanto  Chemical  Company. 

G.  H.  Morrill. 

Mt.  Hope  Finishing  Company. 

Mutual  Chemical  Company  of  America. 
National  Ammonia  Company. 

National  Aniline  and  Chemical  Company. 
National  Electrolitic  Company. 

National  Silk  Dyeing  Company. 

Naugatuck  Chemical  Works. 

New  Bedford  and  Agawan  Finishing  Company. 
Newport  Chemical  Works. 

Niagara  Alkali.  Company. 

Ohio  Chemical  and  Manufacturing  Company. 
Pacific  Mills. 

Park-Davis  Company. 

Patchett  Worsted  Company. 

Peerless  Color  Company. 


49 


Pennsylvania  Salt  Company. 

Permutit  Company. 

Charles  Pfizer. 

Philadelphia  Textile  Machinery  Company. 

Philadelphia  Tapestry  Mills. 

Powers,  W-eightman  and  Rosengarten. 

Rector  Chemical  Company. 

Rhodia  Chemical  Company. 

Roessler-Hasslacher  Company. 

Sayles  Finishing  Plant. 

Schiesselin  and  Company. 

Solvay  Process. 

Semet  Solvay  Company. 

Sherwin-Williams. 

Frederick  Stearns  and  Company. 

J.  L.  Stisel. 

E.  R.  Squibb  and  Son. 

Tartar  Chemical  Works. 

Union  Carbide  and  Carbon  Company. 

Union  Bleaching  and  Finishing  Company. 

United  Piece  Dye  Works. 

United  States  Color  and  Chemical  Company. 

United  States  Finishing  Company. 

United  States  Industrial  Alcohol  Company. 

Upjohn  and  Company. 

Viscoilide  and  Company. 

Wanskuk  Company. 

West  Virginia  Pulp  and  Paper  Company. 

Western  Electric  Company. 

Jacques- Wolfe  Company. 

Youngstown  Sheet  and  Tube  Company. 

Zinseer  and  Company. 

Senator  Calder.  I  was  not  here  when  the  side  in  favor  of  the 
licensing  system  testified.  Was  any  evidence  given  in  this  com¬ 
mittee  about  the  Chemical  Foundation? 

Mr.  Garvan.  Oh,  just  in  a  general  way.  There  was  very 
little  said  about  it. 

Senator  Calder.  I  would  like,  if  you  will,  to  tell  me  how  it 
was  organized,  and  how  the  capital  stock  was  arrived  at,  and  what 
was  paid  for  the  patents? 

Mr.  Garvan.  Having  all  this  history,  which  I  have  only 
touched  upon  and  picked  out  the  salients  without  bothering  you 
with  the  other,  before  me,  the  situation  is  this :  We  saw  these 
patents  there,  which  were  of  no  benefit  as  they  stood.  It  would 
be  of  no  benefit  to  the  duPont’s  or  anybody  else  to  develop 

50 


them,  if,  after  the  war,  Germany  could  come  over  and  exercise 
the  rights  under  the  patent.  So  they  had  to  be  sold.  They 
could  be  given  to  the  country,  but  that  wouldn’t  attain  any  pur¬ 
pose  at  all,  because  there  would  be  nobody  to  enforce  them  as 
against  Germans  bringing  goods  in  under  them  after  the  war. 
They  would  be  just  like  patents  under  discoveries  of  people  in  the 
Patent  Office,  or  people  in  the  Department  of  Agriculture — they 
go  fallow  until  some  smart  German  comes  along,  takes  them  over 
to  his  laboratory  in  Germany,  makes  some  little  addition,  and 
then  makes  them  a  going  concern.  We  looked  around.  There 
was  no  institution  that  we  could  sell  them  to.  Our  attention  was 
first  attracted  to  it  and  to  the  danger  we  were  in  when  we  sold 
Bayer  &  Company.  We  had  not  thought  of  it  before.  Bayer  had 
a  number  of  patents.  And  right  there  I  might  add,  the  number 
of  patents  does  not,  of  itself,  amount  to  anything.  A  company 
may  have  a  hundred  patents  around  one  compound.  But  they 
are  very  valuable  when  properly  protected  and  put  to  use.  We 
sold  Bayer  &  Company.  That  was  a  going  concern.  That  was 
the  only  concern  that  had  any  real  property.  It  was  a  Renssal- 
aer,  New  York.  They  had  quite  a  big  property  and  a  tremend¬ 
ously  valuable  establishment,  the  aspirin  business.  They  were 
making  great  big  money.  We  sold  it,  I  think,  for  $5,400,000. 
The  Sterling  Products  Co.  are  conducting  the  drug  end,  and  the 
Grasselli  Chemical  Co.  are  taking  the  dye  end  of  the  patents, 
and  so  forth.  We  saw  this  situation.  Here  was  the  Grasselli 
Chemical  Co.,  a  great  big  powerful  corporation,  and  they  could 
go  ahead,  but  there  was  no  property  attaching  to  the  other 
patents,  no  buildings,  or  machinery,  or  organization,  or  anything. 
They  could  go  ahead  and  buy  these  other  patents  for  very  little 
and  have  a  monopoly,  for  sure,  and  then  they  could  just  sit  back 
and  collect  a  royalty  from  the  Germans  after  the  war.  They  did 
not  have  to  manufacture  anything;  they  did  not  have  to  go  into 
business. 

So  I  conceived  the  idea  of  forming  the  Chemical  Foundation 
and  putting  all  these  patents  into  a  quasi-public  corporation, 
which  would  develop  them  and  give  them  to  chemical  com¬ 
panies  throughout  the  country.  The  way  the  Salvarsan  had 
worked  out  encouraged  us.  Mr.  Metz  was  in  fear  of  a  monopoly 
here,  he  was  not  afraid  of  I.  G.  in  Germany.  The  best  answer 
is  the  Chemical  Foundation.  We  have  licensed  six  people  to 
make  salvarsan.  Mr.  Metz  is  the  most  successful  one.  We  have 
given  it  to  Squibbs,  and  three,  I  think  altogether. 

Senator  Calder.  The  Chemical  Foundation? 

Mr.  Garvan.  Yes,  sir. 

Mr.  Metz.  No;  the  Federal  Trade  Commission. 


5i 


Mr.  Garvan.  Well,  they  will  have  to  come  to  us.  The  price 
has  gone  down  to  thirty-five  cents - 

Mr.  Metz  (interposing).  No;  to  sixty  cents. 

Mr.  Garvan.  Well,  the  price  has  gone  down  to  sixty  cents. 

To  continue :  So  then  we  had  this  board  of  trustees  composed 
of  Mr.  Otto  T.  Bennard,  the  president  of  the  New  York  Trust 
Co.,  a  very  successful  man,  and  a  trustee  of  Yale  University.  And 
he  has  just  been  made  the  head  of  the  Harkness  Foundation.  He 
is  a  man  whose  name  is  synonymous  with  character  and  public 
service  in  New  York  City.  Then  there  is  Mr.  Cleveland  H. 
Dodge,  whom  you  know  as  being  beyond  influence  in  any  of  this 
business.  Then  there  is  Judge  George  L.  Ingraham,  who  for 
thirty-five  years  has  been  arbiter  on  all  questions  of  ethics  for 
the  New  York  Bar,  and  was  judge  of  the  Appellate  Division  until 
retired  for  age,  having  been  often  offered  higher  courts  through¬ 
out  his  life.  Then  there  is  Ralph  H.  Stone,  president  of  the 
Detroit  Trust  Company,  whom  you  know  very  well,  because  he 
had  organized  the  trust  system  of  the  Alien  Property  Custodian’s 
office  as  a  war  worker.  Then  there  is  Benjamin  Griswold,  Jr., 
of  Alexander  Brown  &  Sons,  Baltimore,  an  old,  well  established 
and  conservative  house.  These  gentlemen  had  consented  to  act 
as  the  advisory  committee  for  the  Alien  Property  Custodian  on 
questions  of  the  sale  of  German  property.  So  they  have  been 
seeing  every  side  of  this  activity  of  the  Germans,  and  knew  the 
whole  thing,  and  we  asked  them  to  act  as  trustees  in  this  new 
organization.  They  do  not  hold  a  share  of  stock.  They  do  not 
receive  a  cent  of  compensation.  They  have  the  nomination  of  all 
officers,  and  then  they  said,  because  of  my  knowledge  of  these 
conditions,  which  I  have  described  to  you  today,  and  of  every¬ 
body  connected  with  the  issues  involved,  that  I  become  president, 
also  without  pay,  until  such  time  as  the  Foundation  becomes  a 
going  concern.  I  got  two  friends  of  mine  to  serve  with  me  with¬ 
out  pay,  one  as  a  vice  president,  who  is  with  J.  G.  White  &  Co., 
a  $25,000  man,  to  establish  our  system,  and  another  man  to 
establish  the  system  of  bookkeeping.  We  have  on  our  payroll 
three  chemists,  one  at  $5,000.  And  Dr.  Chandler,  who  has  con¬ 
sented  to  come  down  and  tell  us  the  value  of  these  patents  for 
$200  a  month.  We  have  one  young  man  investigating  infringe¬ 
ments,  and  so  on. 

Senator  Calder.  How  many  patents  did  they  take  over  ? 

Mr.  Garvan.  Four  thousand. 

Senator  Calder.  The  Alien  Property  Custodian  sold  them 
these  patents? 

Mr.  Garvan.  It  was  by  private  sale  by  the  President. 

Senator  Calder.  For  how  much  money? 

52 


Mr.  Garvan.  Two  hundred  and  fifty  thousand  dollars. 

Senator  Calder.  Will  these  patents  be  of  any  great  value 
some  day? 

Mr.  Garvan.  They  may  or  may  not.  They  would  be  to  any 
person  who  was  going  to  try  to  make  money  out  of  them.  For 
instance,  anybody  who  owned  these  patents  and  wanted  to  make 
money  out  of  them  would  not  be  urging  you  to  pass  this  licensing 
bill.  He  would  be  sitting  back  asking  for  as  large  an  amount  of 
German  goods  to  come  in  as  possible,  because  then  he  could 
collect  the  highest  kind  of  royalty  from  their  coming  in.  It  is  a 
great  loss  of  royalty  to  the  Chemical  Foundation  to  urge  the 
licensing  system,  but  that  is  not  the  reason  for  the  Foundation. 
It  is  to  assist,  encourage  and  promote  American  industry.  Take 
salvarsan,  and  that  is  the  most  valuable  one - 

Senator  Calder  (interposing).  The  most  valuable  patent? 

Mr.  Garvan.  Yes,  sir.  That  patent  in  the  hands  of  a  private 
individual  who  wanted  to  confine  the  manufacture  to  one  man 
and  maintain  the  price  of  three  dollars  and  a  half,  would  be 
worth  any  amount  of  money,  because  10,000,000  syphilities  would 
want  it.  We  gave  it  free  to  the  New  York  State  Board  of 
Health,  to  Massachusetts  State  Board  of  Health,  and  will  give  it 
free  to  any  State  board  of  health  which  will  equip  itself  to  manu¬ 
facture  it  safely.  The  Foundation  will  never  get  anything  from 
them.  We  want,  by  experimentation,  to  help  cure  disease.  Of 
course,  that  patent  is  not  worth  anything;  I  mean,  as  far  as  in¬ 
come  is  concerned,  because  we  want  it  to  help  the  public  and  not 
to  make  money  out  of  it. 

Take  the  Badische  patent  on  vats  dyes ;  that  is  susceptible  of  in¬ 
come,  but  there  is  no  income  possible  until  somebody  in  America 
successfully  manufactures  the  dyes — except  upon  importation, 
like  this  one  here.  It  was  suggested  that  10  per  cent  was  put 
upon  it — Mr.  Metz  suggested  as  a  license  fee  on  that,  coming  in. 
That  was  fixed  when  the  allocation  right  was  given  to  the  German 
agents  here.  It  has  been  the  policy  of  the  executive  committee 
of  the  Foundation  to  charge  to  any  manufacturer  whatever  was 
needed  to  encourage  him,  2  per  cent,  3  per  cent,  or  5  per  cent, 
just  whatever  was  necessary  to  encourage  him  to  manufacture. 
But  when  a  German  agent  wanted  to  import  it  we  thought  it 
proper  to  impose  the  10  per  cent  royalty. 

Senator  Calder.  The  men  whom  you  referred  to,  all  of  whom 
I  know  to  be  men  of  unquestionable  integrity,  may  some  day 
retire,  and  the  control  of  this  thing  might  pass  out  of  their  hands 
and  into  others ;  is  there  a  tremendous  possibility  in  that  ? 

Mr.  Garvan.  With  500  stockholders  in  the  leading  firms  in 

S3 


America?  The  stock  is  noii-transferable.  Each  man  is  going  to 
own  one  share  of  stock.  Just  look  at  the  names. 

Senator  Calder.  Senator  Sutherland  says  it  is  all  in  the  record. 

•  Is  this  a  repetition? 

Mr.  Garvan.  I  am  very  anxious  to  make  this  statement  as 
fully  as  possible,  because  I  do  not  want  to  have  any  rumors  or 
anything  to  interfere  with  this  case.  I  am  pleased  and  delighted 
to  answer  questions  to  the  fullest. 

Senator  Calder.  I  am  very  anxious,  too,  for  information, 
because  the  situation  would  indicate  that  there  is  a  great  possi¬ 
bility  of  tremendous  profits  for  some  people. 

Mr.  Garvan.  If  you  can  take  any  lawyer  in  America  and 
he  can  point  out  the  possibility  where  the  Foundation  could  ever 
be  used,  except  to  serve  the  best  interests  of  the  entire  American 
people,  we  stand  ready  to  amend  it  in  any  way,  shape,  or  form 
necessary.  If  these  trustees  get  crooked,  heaven  pardon  me  for 
expressing  the  idea.  Anyone  of  these  stockholders  could  walk 
into  court  and  dissolve  the  trust  agreement,  and  you  would  have 
the  industries  of  America  owning  the  company.  I  am  reminded 
that  they  have  two  shares  apiece  of  the  common  or  voting  stock. 
As  I  tell  you,  they  are  the  people  who  own  the  corporation.  The 
trustees  are  self-perpetuating.  You  have  to  imagine  that  if  one 
dies  the  other  four  will  appoint  a  crooked  man  in  order  to  get 
the  idea  that  anything  might  happen.  They  will  appoint  a  man 
of  their  own  caliber,  of  course.  It  will  be  continuing.  At  any 
time  they  might  do  any  crooked  thing  a  stockholder  can  walk 
into  court  and  dissolve  them.  What  can  they  do  if  they  do  go 
crooked?  The  charter  provides  that  they  must  issue  licenses. 

Senator  Nugent.  At  the  end  of  seventeen  years  it  all  passes 
out  of  existence? 

Mr.  Garvan.  Except  this,  we  hope  this  Foundation  will  never 
pass  out  of  existence. 

Senator  Nugent.  I  say,  as  far  as  the  patents  are  concerned? 

Mr.  Garvan.  Yes.  All  these  dye  factories,  or  a  number  of 
them,  and  they  will  all  follow,  have  passed  resolutions  which 
places  their  entire  laboratory  equipment  at  the  service  of  the 
American  Medical  Profession,  who  will  lay  out  a  plan  for  ex¬ 
perimentation,  which  can  be  done  right  along  with  the  work  of 
the  dye  men  for  the  benefit  of  any  investigations  that  our  medical 
fraternity  wants  made  for  it. 

Senator  Calder.  These  patents  cover  dyestuffs? 

Mr.  Garvan.  No,  sir.  There  may  be  some  related  things. 

Senator  Calder.  Other  than  chemicals? 

Mr.  Garvan.  No,  sir.  There  may  be  some  related  things. 

Senator  Calder.  I  mean  other  than  drugs  or  related  things. 

54 


Mr.  Garvan.  No,  sir. 

Mr.  Choate.  It  covers  some  apparatus. 

Mr.  Garvan.  Is  there  any  question  anybody  else  would  like 
to  ask  about  this  Chemical  Foundation? 

It  is  our  pride.  It  is  something  we  are  proud  of.  And  I  think 
it  is  like  the  licensing  system.  Gentlemen,  the  thing  to  find  out  in 
connection  with  legislation  is,  what  I.  G.  does  not  want.  You  are 
legislating  against  I.  G.  It  is  what  they  are  afraid  of.  Have  you 
heard  one  of  them  do'  anything  but  sit  with  smiles  when  you  are 
levying  the  highest  tariff  you  can  levy?  No;  it  is  the  Chemical 
Foundation  and  the  licensing  system  that  rankles  in  their  hearts. 
It  is  these  two  ideas  they  are  against.  Licensing  system  may  be 
an  unfortunate  word,  and  I  have  no  suggestion  as  to  what  form 
it  should  take,  but  it  is  that  idea  I  want  to  introduce. 

Senator  Nugent.  A  very  large  number  of  these  patents  will 
expire  in  seventeen  years,  will  they  not? 

Mr.  Garvan.  They  are  expiring  all  the  time. 

Senator  Nugent.  All  of  them  will  expire  in  that  time? 

Mr.  Garvan.  Yes,  sir.  That  is  why  the  trust  agreement  was 
made  for  seventeen  years. 

It  is  a  Delaware  corporation,  and  it  was  suggested  that  that 
brought  it  very  close  to  the  du  Pont.  The  reason  for  it  was  that 
Judge  Grey  was  our  legal  adviser  in  the  matter,  and  we  formed 
the  corporation  in  Delaware  because  that  was  the  one  State  we 
knew  of,  that  would  allow  stock  to  be  trusteed  for  seventeen 
years,  while  New  York  only  allows  it  five  years.  That  is  the 
reason  it  was  formed  in  Delaware,  and  yet  the  accusation  was 
made  against  it  in  one  of  the  hearings  that  it  was  near  the  du 
Pont. 

Senator  Nugent.  These  patents  are  property  of  the  500  stock¬ 
holders  of  the  Chemical  Foundation? 

Mr.  Garvan.  Yes,  sir;  but  they  can  never  derive  beyond  six 
per  cent  on  the  money  they  put  in.  $500,000  was  put  in  and 
$250,000  was  paid  to  the  government,  leaving  $250,000  working 
capital  until  such  time  as  the  people  began  to  manufacture,  and 
we  can  get  royalties.  We  have  only  received  $15,000  in  royalties 
by  this  terrible  corporation,  although  it  has  been  organized  for 
more  than  a  year;  and  it  is  because  the  stuff  is  not  being  manu¬ 
factured  yet  to  any  great  extent.  But  a  stockholder  can  only 
receive  six  per  cent  on  the  actual  cash  put  in.  All  the  balance,  if 
tlrere  is  any  balance  of  profits,  must  be  spent  by  the  trustees  for 
the  encouragement  of  chemical  advancement  in  America,  either 
by  way  of  encouragement  in  colleges  or  scholarship  or  the  estab¬ 
lishment  of  research  laboratories,  or  whatever#in  their  judgment 
they  may  see  fit  to  devote  that  surplus  to.  So  that,  so  far  as  I 

55 


can  see,  nobody  on  earth  could  make  anything  out  of  it  except  the 
common  benefit  to  America.  Nobody  draws  salaries  except  the 
chemists  at  work  finding  out  what  is  in  these  patents. 

I  now  offer  in  evidence  the  constitution  and  by-laws  of  the 
organization,  which  shows  it  is  an  industries-owned  institution : 


“CONSTITUTION  AND  BY-LAWS 
“CHEMICAL  FOUNDATION  ADVISORY  COMMITTEE 

“Article  I. 

“Name 

“The  name  of  this  Committee  shall  be  the  Chemical  Foun¬ 
dation  Advisory  Committee. 


“Article  II 

“The  Chemical  Foundation  Advisory  Committee  is  established 
subject  to  the  supervision  and  control  of  the  Board  of  Directors 
and  President  of  the  Chemical  Foundation,  Inc.,  to  promote  in 
all  lawful  ways  the  interests,  objects  and  purposes  of  the  Chemical 
Foundation,  Inc.,  to  cooperate  in  an  advisory  capacity  with  the 
Foundation  in  the  determination  of  its  general  policies  and  of  its 
policies  regarding  the  forms,  limitations  and  distribution  of 
licenses  under  its  patents,  and  to  render  such  other  services  to 
the  Chemical  Foundation,  Inc.,  as  may  be  deemed  beneficial  to 
the  Chemical  Foundation,  Inc.,  and  to  the  Public  Safety  and 
Welfare. 


“Article  III 

Organization  of  the  Committee 

Section  i.  The  Advisory  Committee  shall  consist  of  the  Presi¬ 
dent  and  Vice-President  of  the  Chemical  Foundation,  Inc.,  a  repre¬ 
sentative  of  the  American  Dyes  Institute,  and  a  representative  of 
the  Manufacturing  Chemists’  Association  of  the  United  States,  to 
be  respectively  chosen  by  each  Association ;  the  Chairman  of  the 
Section  Committees  and  not  to  exceed  five  committeemen  at  large, 
to  be  chosen  by  the  President  of  the  Chemical  Foundation,  Inc. 

“The  Advisory  Committee  shall  supervise  and  direct  investiga¬ 
tion  of  any  and  all  matters  which  the  Board  of  Directors  or 
President  of  the  Chemical  Foundation,  Inc.,  may  refer  to  it,  and 
shall  report  thereon  to  said  Board  of  Directors  or  President,  shall 
appoint  such  special  sub-committees  as  it  may  deem  necessary, 
and  may  abolish  the  same,  and  shall  have  such  other  powers  and 
duties  as  may  be  given  to  it  from  time  to  time  by  the  President 
and  Board  of  Dir&tors  of  the  Chemical  Foundation,  Inc. 

“Sec.  2.  Meetings  of  the  Advisory  Committee.  A  meeting 

56 


of  the  Advisory  Committee  shall  be  held  immediately  after  the 
Annual  Meetings  of  the  Section  Committees,  as  hereinafter  pro¬ 
vided  for.  Regular  monthly  meetings  shall  be  held  at  2.30  o’clock, 
P.  M.,  on  the  third  Wednesday  of  each  month,  and  special  meet¬ 
ings  may  be  held  at  the  call  of  the  President  or  Vice-President 
of  the  Chemical  Foundation,  Inc.,  or  by  request  in  writing  to  the 
Secretary  signed  by  three  members  of  the  Advisory  Committee. 
At  least  five  days’  notice  of  such  meetings  shall  be  given  to  each 
member  of  the  Advisory  Committee.  Five  members  of  the  Ad¬ 
visory  Committee  shall  constitute  a  quorum. 

“Article  IV 
“Officers 

“Section  i.  The  officers  of  the  Advisory  Committee  shall  be 
a  Chairman,  a  Vice-Chairman,  who  shall  be  respectively  the  Presi¬ 
dent  and  Vice-President  of  the  Chemical  Foundation,  Inc.,  and 
a  Secretary,  who  shall  be  elected  annually  by  the  Advisory  Com¬ 
mittee  at  its  annual  meeting.  The  Secretary  shall  hold  office  for 
one  year  and  until  his  successor  shall  have  been  elected  and  shall 
have  accepted  office.  Any  vacancies  in  office  shall  be  filled  by  the 
Advisory  Committee.  The  Secretary  need  not  be  a  member  of 
the  committee. 

“Sec.  2.  The  Chairman  shall  preside  at  all  meetings  of  the 
Advisory  Committee.  He  shall  be  a  member,  ex-officio,  of  all 
sections  and  all  committees  and  shall  perform  such  duties  as  are 
necessarily  incident  to  his  office. 

“In  the  absence  or  disability  of  the  Chairman  his  duties  shall 
be  performed  by  the  Vice-Chairman.  The  Vice-Chairman  shall 
be  a  member,  ex-officio,  of  all  sections  and  all  committees. 

“Sec.  3.  The  Secretary  shall  keep  a  record  of  the  proceedings 
of  the  Advisory  Committee  and  of  all  other  meetings  of  which  a 
record  shall  be  deemed  advisable  by  the  Advisory  Committee.  It 
shall  be  the  duty  of  the  Secretary  to  issue  notices  for  all  meetings 
of  the  Advisory  Committee.  He  shall  perform  such  other  duties 
as  may  be  delegated  to  him  by  the  Advisory  Committee. 

“Article  V 

“Organization  of  Sections 

“Section  i.  The  stockholders  of  the  Chemical  Foundation, 
Inc.,  shall  be  divided  into  the  following  sections  for  the  purpose 
of  assembling  in  groups  of  like  or  kindred  interest : 

“1.  Dyes  and  intermediates. 

“2.  Pharmaceuticals  and  medicinal  chemicals. 

“3.  General  chemicals  and  fertilizers. 

“4.  Textiles,  including  dyers  and  finishers. 

57 


“Additional  sections  shall  be  formed  from  time  to  time  when 
in  the  opinion  of  the  President  or  Board  of  Directors  of  the 
Chemical  Foundation,  Inc.,  there  is  a  sufficient  number  of  stock¬ 
holders  of  like  or  kindred  interest  to  justify  their  formation.  # 

“Each  stockholder  shall  designate  the  section  into  which  assign¬ 
ment  is  desired,  and  shall  be  so  assigned.  No  stockholder  shall 
be  assigned  to  more  than  one  section  except  upon  approval  of  the 
President  or  Vice-President  of  the  Chemical  Foundation,  Inc. 

“Sec.  2.  Sections  shall  be  represented  by  a  section  committee 
of  not  less  than  three,  elected  by  and  from  the  membership  of 
each  section.  The  Chairman  and  Vice-Chairman  of  the  Advisory 
Committee  shall  be  ex-officio  members  of  all  sections  and  all 
committees. 

“Sec.  3.  Each  section  may  adopt  its  own  rules  and  regulations, 
provided  such  are  not  inconsistent  with  the  Constitution  and  By¬ 
laws  of  the  Advisory  Committee. 

“Sec.  4.  Each  section  shall  elect  its  section  committee  at  the 
time  of  the  Annual  Meeting,  or  at  the  time  of  any  special  meet¬ 
ing  of  the  stockholders  called  for  the  purpose.  Section  Com¬ 
mittees  shall  have  power  to  elect  their  own  chairman  and  to  fill 
vacancies.  No  person  shall  be  chairman  of  more  than  one  section 
committee.  Each  chairman  of  a  section  committee  shall  be  ipso 
facto  a  member  of  the  Advisory  Committee. 

“Article  VI 
“Section  Meetings 

“Section  i.  Annual  Meeting.  The  Annual  Meeting  of  all 
sections  shall  be  held  immediately  following  the  Annual  Stock¬ 
holders  Meeting  of  the  Chemical  Foundation,  Inc.,  and  at  the 
same  place. 

“Sec.  2.  Special  Meetings.  The  Secretary  shall  call  a  special 
meeting  of  any  section  or  section  committee,  whenever  directed 
to  do  so  by  the  Advisory  Committee,  or  whenever  requested  in 
writing  to  do  so  by  five  or  more  members  of  the  particular  sec¬ 
tion.  Each  such  request  in  writing  shall  state  the  object  or  objects 
for  which  the  meeting  is  desired,  and  no  object  not  so  stated 
shall  be  acted  upon  at  the  meeting. 

“Sec.  3.  Notice  of  Meeting.  At  least  14  days’  written  notice 
or  7  days  telegraphic  notice  of  the  Annual  Meeting  or  of  any 
special  meeting  shall  be  sent  by  the  Secretary  to  each  member. 
Notice  of  each  special  meeting  shall  set  forth  the  object  or  objects 
for  which  it  is  called. 

“Sec.  4.  Quorum.  A  quorum  at  any  annual  or  special  meet¬ 
ing  of  any  section  shall  be  not  less  than  three  members  in  person 

58 


or  by  proxy,  unless  and  until  such  section  shall  by  resolution 
otherwise  provide.  Less  than  a  quorum  may  adjourn  any  meet¬ 
ing  for  a  period  not  longer  than  twenty  days. 

“Sec.  3.  Each  member  shall  be  entitled  to  one  vote,  irrespective 
of  the  amount  of  stock  of  the  Chemical  Foundation,  Inc.,  held, 
and  may  vote  in  person  or  by  proxy,  provided  the  proxy  be  duly 
executed  in  writing  within  two  months  prior  to  the  meeting  at 
which  it  is  presented  for  use.  A  proxy  given  for  any  meeting 
shall,  unless  notice  of  revocation  is  delivered  to  the  presiding 
officer,  hold  good  for  adjournments  of  that  meeting. 

“Article  VII 

“Resignation  and  Withdrawal 

“Any  member  may  withdraw  from  any  section  by  giving  writ¬ 
ten  notice  of  resignation  to  the  Secretary,  and  any  member  who 
ceases  to  be  a  stockholder  of  the  Chemical  Foundation,  Inc.,  shall 
ipso  facto  cease  to  be  a  section  member. 

“Article  VIII 

“Amendments 

“The  Constitution  and  By-Laws  may  be  amended  at  any  meet¬ 
ing  of  the  stockholders  of  the  Chemical  Foundation,  Inc.,  by  a 
vote  of  two-thirds  of  the  members  present  in  person  or  by  proxy, 
provided  a  copy  of  the  amendment  or  the  substance  thereof  shall 
have  been  given  in  the  notice  calling  the  meeting. 

“The  Advisory  Committee  may  amend  the  Constitution  and 
By-Laws  at  any  meeting  by  a  vote  of  two-thirds  of  the  members 
present,  subject  to  ratification  at,  the  next  succeeding  meeting  of 
the  stockholders  of  the  Chemical  Foundation,  Inc.” 

Mr.  Garvan.  It  may  be  of  interest  to  the  committee  to  see  Dr. 
Schwietzer’s  analysis  of  the  1916  tariff.  By  it  you  can  see  that 
they  were  not  afraid  of  that. 

“Dyestuffs  File  317 

“I  (von  Igel) 

“Jr.  No.  1048.  New  York,  January  26,  1917. 

“I  am  respectfully  transmitting  to  your  Excellency  an  expert 
opinion  on  the  effect  of  the  new  duties  on  dyestuffs  handed  over 
to  me  from  an  expert  source  (Dr.  Hugo  Schweitzer-Bradische 
Anilinfabrik-Baden  Aniline  Factory.)  As  the  matter  is  still  in 
a  fluid  state  and  possibly  still  other  changes  in  the  legislation — of 
which  I  enclose  a  copy — will  have  to  be  reckoned  with,  I  refrain 
from  more  detailed  explanation  until  further  notice.  I  suggest, 
however,  that  the  expert  judgment  be  passed  on  to  Berlin. 

59 


T o  His  Excellency : 

The  Imperial  Ambassador, 

Count  von  Bernstoff. 

Washington,  D.  C. 

Translated  by  J.  P.  Hoskins. 

“The  influence  of  the  new  customs-tariff  and  its  prospective 
effect  on  German  importation,  and  on  the  development  of  the 
American  industry  into  an  expert  industry,  and  on  the  chances 
of  the  American  dyestuff  industry  in  the  world  market  must  be 
considered  from  two  points  of  view : 

“i.  During  a  long  war.  Should  the  war  still  continue  for 
years,  then,  of  course,  the  industry  here  would  be  very  much 
furthered  and  would  have  a  great  boom.  The  United  States  does 
not  lack  raw  materials  for  the  manufacture  of  dyestuffs  of  any 
kind  whatsoever.  The  only  product  necessary  for  manufacture 
that  must  be  imported  is  saltpeter.  The  question  of  price  does 
not  play  any  part  in  this  either,  for  as  long  as  dyestuffs  cannot 
be  imported  and  must  be  produced  here,  the  question  whether  the 
price  of  manufacture  is  higher  or  lower  makes  no  difference.  A 
longer  war  will  bring  the  further  danger  that  the  plants  can  be 
amortized  from  the  great  earnings  which  can  be  made,  and  that 
the  factories  after  the  peace  can  carry  on  competition  with  the 
German  dyestuffs  more  easily. 

“The  difficulties  in  manufacture,  which  are  incomparably 
greater  in  the  manufacture  of  intermediate  products  than  in  the 
manufacture  of  dyestuffs  from  imported  derivatives,  will  be 
gradually  overcome.  The  greatest  lack  is  that  of  technically 
trained  chemists.  It  seems  that  American  industry  is  trying  to 
emancipate  itself  in  this  respect,  by  importing  chemists  from 
Switzerland.  One  of  the  largest  of  the  newly  founded  factories 
is  said  to  have  engaged,  together  with  thirty  chemists,  Maurice 
Ceresole  who  was  lately  professor  of  technical  chemistry  at  the 
University  of  Zurich,  and  formerly  manager  of  the  French 
branch  of  the  Baden  Aniline  and  Soda  Factory,  and  had  worked 
still  earlier,  together  with  myself,  in  the  Badische  Aniline-und 
Soda  fabrik  in  Ludwigshafen,  in  order  to  help  build  up  the  Ameri¬ 
can  dyestuffs  industry  here.  I  have  not  yet  succeeded  in  finding 
out  which  factory  has  employed  these  chemists. 

“How  difficult  the  production  of  Derivatives  is,  is  apparent 
from  a  letter  which  was  sent  to  an  American  manufacturer  by 
the  French  branch  of  the  Badische  Aniline-und  Soda  fabrik,  on 
September  13,  1915,  i.  e.,  over  a  year  after  the  outbreak  of  the 
war,  and  which  in  the  translation  runs  as  follows : 

“We  are  purchasers  of  beta-naphthel,  beta-naph  rylamine, 
dyphenylamine,  dimethyaniline.  Will  you  please  tell  me  whether 

60 


you  sell  these  products,  and  in  case  you  do,  please  inform  us  of 
your  conditions  and  the  quantities  you  can  offer  us. 

“At  the  same  time  we  beg  you  to  inform  us  of  other  raw 
materials  of  interest  for  the  manufacture  of  dyestuffs  which  you 
may  have  to  offer  us,  aside  from  those  mentioned  above. 

“In  case  your  answer  should  be  negative,  we  should  be  obliged 
to  you  if  you  would  kindly  indicate  to  us  the  address  of  firms  to 
whom  we  could  address  ourselves  with  prospect  of  success. 

“The  contents  of  this  letter  proves  that  the  branch  of  the 
Badische  Anilin-und  Soda  fabrik  which  has  existed  since  that 
time,  to  be  sure  from  derivatives  which  were  delivered  by  the 
manufactory  in  Ludwigshafen,  could  not  itself  manufacture  such 
simple  intermediate  products  as  beta-naphthel,  beta-naph  thy- 
lamine,  diphenylamine  and  dimethylaniline.  This  branch  had  be¬ 
sides  the  advantage  that  chemists  stood  at  its  disposal  which  had 
been  trained  in  the  German  factory  and  had  been  sent  by  the 
same  to  France  in  order  to  produce  as  serviceable  dyestuffs  as 
those  manufactured  in  Germany. 

“The  manufacture  of  the  derivatives  offers  much  greater  diffi¬ 
culties  for  an  industry  still  in  the  process  of  development  for  the 
reason  that  such  an  incredibly  large  variety  of  products  is  neces¬ 
sary.  In  a  well  developed  industry  like  that  of  the  Germans,  a 
technical  use  is  found  in  the  end  for  all  these  products.  In  a  less 
well-developed  industry  and  in  an  industry  which  is  only  in  the 
process  of  development,  great  hindrances  stand  in  the  way  of 
the  utilization  of  these  derivatives,  many  cannot  be  used  at  all, 
and  thus  become  waste  products.  The  price  of  these  derivatives 
which  can  be  utilized  is  thereby  increased  to  an  incredible  degree. 
In  order  to  make  the  manufacture  and  utilization  of  these  deriva¬ 
tives  more  graphic,  I  subjoin  the  enclosed  table  which  shows  how 
many  derivatives  of  a  single  anthracite  coal  tar  raw  product, 
namely  nathaline,  are  combined  with  a  single  basic  substance 
benzidine,  in  order  to  form  dyestuffs.  In  a  well  developed  in¬ 
dustry  all  these  products  are  manufactured  and  ultimately  find 
utilization.  Those  whose  names  appear  in  quadrates  are  used 
directly  for  the  manufacture  of  colors,  those  which  are  enclosed 
in  ovals,  are  at  the  present  time  not  yet  utilized  but  are  subjects 
of  scientific  investigation  and  will  ultimately  find  suitable  utiliza¬ 
tion. 

“The  manufacture  of  derivatives  stands  in  Germany  on  such 
an  incredibly  high  plane  that  the  prices  for  the  manufactured 
articles  are  very  low.  It  would  take  American  industry  many 
many  years  before  the  same,  even  if  it  will  ever  be  possible  at  all, 
could  produce  these  derivatives  as  shapely  as  German  industry 
does.  In  order  to  show  these  differences  of  price,  the  following 
examples  may  be  cited : 


61 


It  cost  in  1908  in  Germany, 
per  lb.  in,  cents. 


Imported  to  America  under 
the  tariff  at  that  time. 


$  9.28 .  Aniline  Oil  _ 

16.00 .  Paranitraniline  .. 

23.29. , . H-Acid . 

6.20 .  Alpha-N aphthylamine 

9.68 .  R.  Salt  . 

17.60  . Amido-G-Salt  ... 

11.60  .  Freund  Acid  ... 

11.60 .  Cleve  Acid  .... 

29.36 . Gamma . 

12.06 .  Salicylic  Acid  . . . 

26.40 .  Tolidine  . 

24.20 .  Benzidine  .... 


$11.60 

24.00 

34.80 

7.75 

14.50 

26.75 

17.25 

17.25 
44.00 
26.01 
33.00 

30.26 


“These  are  figures  which  American  industry  will  never  attain. 
It  can  be  assumed  with  certainty  that  the  most  of  these  products 
cannot  be  manufactured  here  at  three  to  four  times  the  price. 

“The  wonderfully  developed  technique  of  derivatives  will, 
therefore,  for  many  years  to  come,  give  German  industry  a  pre¬ 
ponderance  over  all  other  lands  in  which  the  derivative  industry 
has  first  to  be  built  up. 

“2.  After  the  Peace.  The  question,  what  prospective  effect 
the  custom  duties  will  have  on  German  importation,  on  the  devel¬ 
opment  of  American  industry  into  an  exporting  industry  and 
upon  its  chances  in  the  world  market,  can  be  answered  by  a  single 
argument : 

“The  new  tariff  divides  the  products  used  and  manufactured 
in  the  dyestuff  industry  into  three  groups:  raw  products,  half 
products  (derivatives)  and  dyes.  While  the  raw  products  are 
imported  free  of  duty,  on  the  half  products  and  the  dyes,  in  addi¬ 
tion  to  an  ad  valorem  duty,  a  specific  duty  of  2^2  cents  per  lb.  and 
5  cents  per  lb.  for  the  dyestuffs  is  levied. 

“Happily  the  following  dyes  are  excluded  from  this  specific 
duty:  ‘except  natural  and  synthetic  alizarin,  and  dyes  obtained 
from  alizarin,  anthracene  and  carbazel,  natural  and  synthetic 
indigo  and  all  indigoids,  whether  or  not  obtained  from  indigo,  and 
medicinals  and  flavors.’  This  exception  may  well  become  the 
sheet-anchor  of  the  German  industry.  The  dyestuffs  which  are 
excepted  from  this  specific  duty,  are  the  so-called  vat-dyes,  and 
these  vat-dyes  are  a  comparatively  modern  achievement  of  the 
German  dye  technique  and  are  in  general  regarded  as  the  most 
genuine  dyes. 

“The  pre-eminent  enduring  qualities  of  these  products  have 
already  brought  it  about,  and  will  do  it  even  more  so  in  the  future 
than  the  older  anthracide  coal-tar  dyes,  which  in  many  respects 
are  inferior  to  the  vat-dyes  will  be  driven  from  the  market.  The 
manufacture  of  these  vat-dyes  is  very  complicated  and  can  be 
undertaken  only  in  a  very  highly  developed  industry.  It  is 

62 


wholly  out  of  the  question  that  a  new  industry  like  the  American 
can  take  up  the  manufacture  of  these  vat  dyestuffs  and  it  may 
well  take  a  very  long  time  before  the  dyestuff  industry  outside 
of  Germany  can  concern  itself  with  the  manufacture  of  these 
complicated  products.  Here  the  very  greatest  exertions  will  not 
make  it  possible  to  cope  with  the  competition  of  Germany.  In 
our  considerations  it  is  of  still  further  importance  that  these  vat- 
dyes  are  much  dearer  than  the  ordinary  anthracite  coal  tar  dye¬ 
stuffs,  which  is  readily  explicable  in  view  of  the  difficulties  of 
manufacture.  But  in  spite  of  this  higher  price  the  vat  dye¬ 
stuffs,  on  account  of  superior  tinctorial  qualities,  are  finding  a 
more  and  more  widely  extended  sphere  of  application  in  all  fields 
of  the  textile,  leather,  paper,  etc.,  industry. 

“The  history  of  American  tariff  legislation  has  shown  that  in 
general  a  protective  tariff  of  30  per  cent  ad  valorem  does  not 
afford  sufficient  protection  to  create  an  American  industry.  If 
this  was  the  case  with  the  old  anthracite  coal  tar  dyestuffs,  of 
which  only  a  few  staple  kinds  were  ever  manufactured  here, 
and  these  for  the  most  part  from  derivatives  which  were  imported 
from  Germany,  a  protective  tariff  of  30  per  cent  is,  of  course, 
absolutely  insufficient  for  the  most  complicated  vat  dyestuffs. 

“In  recognition  of  this  fact  the  new  tariff  provides  the  specific 
duties  in  order  to  provide  a  far  greater  protection  for  the  Ameri¬ 
can  industry. 

“But  the  new  tariff  now  specifies  the  following  in  regard  to 
the  specific  duties: 

“  ‘But  if,  at  the  expiration  of  five  years  from  the  date  of  the 
passage  of  this  Act,  the  President  finds  that  there  is  not  being 
manufactured  or  produced  within  the  United  States,  as  much  as 
sixty  per  centum  in  value  of  the  domestic  consumption  of  the 
articles  mentioned  in  Group  II  and  III  of  section  five  hundred, 
he  shall  by  proclamation  so  declare,  whereupon  the  special  duties 
imposed  by  this  section  on  such  articles  shall  no  longer  be 
assessed,  levied  or  collected.’  ” 

“Here  is  where  the  German  industry  must  apply  the  lever.  It 
must,  in  any  case,  of  these  vat-dyes  which  must  be  regarded  as 
the  ‘highest  quality’  goods  of  the  industry,  dispose  of  in  the 
American  market  more  than  40  per  cent  of  the  total  consumption 
in  derivatives  and  dyestuffs,  in  order  that  the  President  will  be 
in  the  position  to  abolish  the  specific  duties.  If  this  is  actually 
made  possible,  and  the  President  must  abolish  these  specific  duties, 
then  the  German  industry  will  be  in  the  same  position  as  before 
the  war,  and  has  only  to  deal  with  the  duty  of  30  per  cent  ad 
valorem  which,  as  has  already  been  elucidated  above,  was  insuffi¬ 
cient  in  the  past  to  create  an  American  industry. 

“That  it  should  be  as  easy  as  child  play  for  German  industry 

63 


to  sell  as  much  vat  dyestuffs  in  the  United  States  that  the  value 
of  the  same  will  amount  to  ‘sixty  per  cent  in  value  of  the 
domestic  consumption  of  the  article  mentioned  in  Group  II  and 
III  of  section  five  hundred,’  is  apparent  from  the  following  con¬ 
siderations  : 

“i.  The  vat  dyestuffs  have  in  the  past,  and  will  even  more  so 
in  the  future,  supplant  the  old  anthracite  coal-tar  dyestuffs. 

“2.  The  money  value  of  the  vat  dyestuffs  is  uncommonly 
higher  than  the  money  value  of  the  old  anthracite  coal  tar  dye¬ 
stuffs. 

“3.  The  importation  from  Germany  of  these  vat  dyes  amounts 
today  already  to  27.63  per  cent  of  the  money  value  of  the  total 
dyestuffs  importation. 

“From  the  statements  of  the  Chemical  Journal  of  the  year  1914, 
we  gather  for  the  year  1913,  the  following  figures  for  imports 
into  the  United  States : 


Percentage  of 
the  whole 

Indigo  . $  1,316,913  13.08 

Alizarian .  178,587  1.77 

Antracene  dyestuffs  .  1,207,037  12.78  27.63 

Aniline  dyestuffs  .  7,288,471  72.40 


$10,071,008  100.03 

“In  this  connection,  however,  we  must  pay  regard  to  the  fact 
that  Germany  in  the  year  1913,  imported  to  the  United  States 
derivatives  to  the  value  of  $1,086,300.  The  foregoing  percentage 
of  27.63  is  somewhat  lowered  thereby.  On  the  other  hand  the 
production  of  the  old  aniline  dyestuffs  out  of  derivatives  which 
have  been  imported  from  Germany,  would  naturally  decrease 
from  the  increased  exportation  of  vat  dyes,  so  that  in  our  reckon¬ 
ing  the  value  of  the  derivatives  can  in  fact,  be  entirely  neglected. 

“The  high  price  of  vat  dyes  which  is  on  the  average  four  or 
five  times  as  much  as  that  of  the  old  aniline  dyestuff  consumption. 
From  a  recently  published  list  it  turns  out  that  51 1  dyes,  to  the 
value  of  $7,500,000,  have  been  imported  into  America,  that  is, 
the  average  import  value  of  a  dye  amounts  to  $14,000.  In  this 
list  four  vat  dyes  are  given,  which,  altogether,  were  worth 
$214,000,  so  that  the  average  price  of  $14,000  for  dyestuffs  in 
the  case  of  all  dyestuffs,  rises  to  about  $50,000  for  the  vat  dyes, 
i.  e.,  amount  to  about  four  times  the  average  value. 

“When  the  time  shall  have  come  that  the  German  industry  will 
import  more  than  40  per  cent  of  the  vat  dyes,  and  in  America 
less  than  80  per  cent  of  the  value  of  the  domestic  consumption 
will  be  manufactured,  then  great  difficulties  in  the  calculation  of 
these  figures  will  emerge,  and  it  will  depend  on  the  party  politics 
of  the  President  at  that  time,  whether  he  will  make  an  honest 


effort  to  abolish  the  specific  duty  or  not.  How  is  this  ‘value  of 
the  domestic  consumption’  to  be  reckoned  ?  How  will  the  customs 
prices  be  taken  into  consideration  in  connection  with  the  freight 
rates,  and  with  the  expenses  of  insurance  and  of  business?  In 
the  case  of  the  domestic  industry  how  will  the  expenditures  for 
amortization,  for  general  business  expenses,  trade  mark,  and 
patent  ownership  be  counted  in  the  calculation? 

“From  these  arguments  it  is  clear  that  the  salvation  of  the 
German  dyestuff  industry  is  to  be  sought  in  the  development  of 
vat  dyestuffs  chemistry.  The  tendency  to  develop  this  field  to 
the  highest  degree  possible,  existed  already  before  the  outbreak 
of  the  war.  The  new  tariff  brings  then  no  change  in  this  line. 
For  the  industry  after  the  war  also  no  change  would  arise  in  this 
regard,  since  in  any  case  Germany  will  be  compelled  to  manu¬ 
facture  and  to  export  high  grade  goods  in  the  entire  industrial 
field  in  contrast  to  articles  demanded  in  large  quantities,  which 
can,  little  by  little,  be  produced  in  all  countries. 

“In  the  competition  in  the  field  of  goods  demanded  in  quan¬ 
tities  German  industry  will  in  the  end  not  fare  much  worse 
under  the  new  tariff  since,  by  the  manufacture  of  derivatives 
forced  upon  American  industry,  the  dyestuff  manufactured 
thereof,  will  stand  them  at  a  much  dearer  price,  so  that  the 
old  tariff  rate  of  30  per  cent  ad  valorem  will  mean  a  still  smaller 
protection  for  the  American  industry.  This  will  not,  of  course, 
come  .completely  to  light  until  the  specific  duties  have  been  abol¬ 
ished,  but  even  if  these  specific  duties  are  not  abolished  the  higher 
prices  of  derivatives  will  tend  more  and  more  to  eliminate  the 
difference  between  the  protection,  which  the  old  percentage  of 
30  per  cent  plus  specific  duties  afford.” 

Mr.  Garvan.  I  want  also  to  offer  in  evidence  an  article  by  Dr. 
Schweitzer,  who  knew  more  about  this  chemical  business  than 
any  other  man  in  America.  He  was  a  great  scientist  and  a  very 
able  man.  He  wrote  this  article,  called  “ The  Chemist  War,” 
which  gives  exactly  the  situation  a  year  or  two  ago  in  the  chemical 
world : 


THE  CHEMISTS’  WAR 

“We  fear  German  efficiency.”  That  is  the  reason  assigned  by 
the  editor  of  the  most  prominent  Anglo-American  newspaper  of 
New  York  for  the  anti-German  attitude  of  his  possibilities.  The 
efficiency  of  the  German  nation  is  indeed  wonderful,  but  instead 
of  inciting  our  antagonism  it  should  serve  as  a  lesson,  it  should 
arouse  our  admiration,  and  above  all,  should  cause  us  to  apply 
ourselves  as  industriously  and  as  indefatigably  as  the  Germans  do, 
so  that  we  shall  no  longer  fear  them,  but  emulate  and  even  sur¬ 
pass  them.  Our  task  compared  with  that  of  the  Germans  should 

65 


be  relatively  simple,  as  we  have  natural  resources  superior  to  those 
possessed  by  any  other  nation,  and;  unlike  the  citizens  of  Euro¬ 
pean  countries,  we  inhabit  a  continent  which  is  secure  against  all 
aggression. 

“In  no  other  field  has  German  efficiency  proven  its  superiority 
more  than  in  that  of  chemistry.  While  this  was  undisputed  before 
the  present  war,  it  is  no  exaggeration  to  state  today  that  the  Ger¬ 
man  chemist  has  so  far  contributed  as  much,  if  not  more,  to  the 
success  of  the  campaign  than  the  strategist,  the  army  and  the 
navy,  and  that,  therefore,  the  present  holocaust  may  be  justly 
called  the  Chemists’  War. 

“Germany,  deprived  of  all  imports  by  the  seapower  of  England, 
has  been  transferred  into  a  self-supporting  country  by  the 
chemist.  This  necessitated  a  readjustment  along  the  whole  line. 
Food  for  the  people  and  fodder  for  animals  had  to  be  provided 
within  the  confines  of  the  empire.  Materials  had  to  be  manu¬ 
factured  which  hitherto  had  been  imported,  and  substitutes  had  to 
be  improvised  for  raw  materials,  the  supplies  of  which  had  been 
cut  off  by  the  English  blockade. 

“The  most  remarkable  results  have  thus  been  achieved  in  agri¬ 
cultural  chemistry,  and  nothing  has  been  of  greater  consequence 
than  the  method  by  which  Germany  will  render  herself  forever 
independent  of  the  importation  of  fodder,  for  which  she  was 
obliged  to  expend  annually  250  millions  of  dollars.  Most  of  this 
money  went  to  the  United  States  for  so-called  concentrated  feed — 
cottonseed  oil  cakes,  corn  oil  cakes,  and  similar  by-products — the 
export  of  which  has  contributed  largely  to  the  profits  of  the  agri¬ 
cultural  industries  of  our  country,  and,  therefore,  to  the  pros¬ 
perity  of  our  farmers,  especially  those  of  the  South  and  Middle 
West. 

“It  will  be  of  general  interest  to  describe  how  this  great  deed 
was  accomplished.  It  has  been  known  for  some  time  that  in  the 
process  of  fermentation,  that  is,  the  conversion  of  sugars  into 
alcohol  by  means  of  certain  lower  orders  of  plants,  such  as  yeast, 
albuminous  substances  are  generated  by  the  growth  of  the  yeast. 
But  the  amount  of  such  albumen  was  very  small,  in  fact  its 
formation  during  alcoholic  fermentation,  was  considered  most 
undesirable,  as  owing  to  its  presence  fusel  oil  and  other  impurities 
were  produced.  About  1910  it  was  realized,  however,  that  the 
albuminous  matter  contained  in  yeast  might  be  of  value  as  a  food 
for  human  beings  and  as  fodder.  Experiments  were  at  once 
undertaken  in  a  most  systematic  and  comprehensive  way  by  the 
Institute  for  the  Fermentation  Industry  in  Berlin,  and  soon  two 
varieties,  a  pressed  food  yeast  and  a  pressed  fodder  yeast,  were 
obtained  which  were  found  to  give  highly  satisfactory  results  in 

66 


practical  feeding  experiments.  The  only  trouble  was  the  small 
yield  of  albumen  which  made  the  process  unprofitable.  During 
the  last  few  months  this  difficulty  has  been  overcome,  and  on 
April  3  public  announcement  was  made  of  the  complete  success 
of  this  process.  The  favorable  results  were  brought  about  by 
carrying  out  the  fermentation  in  the  presence  of  sulfate  of 
ammonia  as  a  source  of  nitrogen,  which  by  the  metabolism  of 
the  yeast  is  converted  from  its  inorganic  into  its  organic  form 
albumen). 

“From  ioo  parts  of  sugar  by  the  use  of  52  parts  of  ammonium 
sulfate  270  parts  of  pressed  yeast  have  been  obtained ;  indeed 
experiments  have  been  published  according  to  which  100  parts  of 
sugar  furnish  100  parts  of  water-free  dry  yeast.  Yet  even  these 
incredible  yields  and  the  fact  that  Germany  is  the  largest  producer 
of  sugar  in  the  world,  would  have  availed  nothing  if  sulfate  of 
ammonium,  the  nutrient  of  the  yeast,  could  not  be  procured  at  an 
economical  cost. 

“But  chemical  ingenuity  also  provided  a  source  for  this  material 
which  is  likewise  employed  very  largely  as  a  nitrogen  fertilizer. 
It  has  always  been  recovered  as  a  by-product  in  the  coking  of 
coal,  an  industry  in  which  Germany  leads  the  world.  But  largely 
it  has  beeen  produced  on  an  extremely  large  scale  by  direct  com¬ 
bination  of  hydrogen  and  nitrogen,  as  carried  out  exclusively  in 
Germany.  The  nitrogen  needed  in  the  manufacture  of  sulfate  of 
ammonium  is  obtained  from  the  atmospheric  air  and  in  this  form 
is  converted  into  albumen  by  the  yeast.  We  have  here  the  most 
interesting  and  most  direct  transformation  of  nitrogen  from  the 
air  in  food  albumen.  Hitherto  this  conversion  has  been  most 
complicated.  The  inorganic  ammonium  sulfate  has  served  as  a 
fertilizer  for  bread  cereals  and  those  grains  and  plants  which  are 
used  as  fodder ;  animals  are  raised  on  this,  and  when  slaughtered, 
their  meat  furnishes  a  large  part  of  the  albumen  contained  in  our 
food.  How  complex  and  tedious  this  process  is,  appears  from 
the  following  fact :  Cereals  and  plants  require  from  6  to  8  weeks 
for  their  development,  they  grow  only  during  about  one-third 
of  the  year,  the  months  of  May,  June  and  July,  while  their  pro¬ 
duction  is  restricted  by  the  area  on  which  crops  can  be  raised. 
The  animals  require  space  for  their  keeping  and  they  must  be 
tended  with  extreme  care. 

“On  the  other  hand,  yeast  plants  develop  very  quickly  and  attain 
their  full  growth  within  a  few  days.  They  thrive  in  any  kind 
of  receptacle  independent  of  rain  or  shine,  they  need  no  light  and 
can  be  grown  all  the  year  round. 

“The  production  of  yeast  is  not  a  new  departure ;  in  fact  large 
amounts  are  today  produced  in  the  distillery  industry,  in  the 

67 


brewing  of  beer  and  the  manufacture  of  wine.  The  yeast  formed 
in  these  processes  of  fermentation  is  a  by-product,  which  after 
compression  is  extensively  employed  in  the  baking  of  bread, 
cake,  etc. 

“In  the  new  fermentation  processes,  however,  the  main  object 
is  the  production  of  yeast  which  is  intended  to  be  used  as  an 
albuminous  food  for  human  beings  and  animals. 

“2.  Besides  its  value  as  an  economical  substitute  for  animal 
albumen,  yeast  will  be  preferred  by  many  people  who  have  an 
aversion  to  meat  or  who  consider  the  slaughter  of  animals  for 
food  purposes  cruel  and  disgusting.  Its  importance  will  be  fur¬ 
ther  realized  by  bearing  in  mind  that  it  affords  the  vegetarian 
the  required  amount  of  an  albumen  which  as  regards  nutritive 
properties  is  ever  superior  to  meat  albumen  since  it  contains  two 
per  cent  of  lecithin  which  is  of  great  value  as  a  nerve  food  and 
tonic.  Yeast  also  contains  vitamines  which  are  so  necessary  for 
nutrition,  and  the  absence  of  which  in  our  dietary  is  the  cause  of 
much  sickness.  Take,  for  example,  Beri-beri,  a  disease  which  is 
caused  by  the  eating  of  polished  rice  from  which  the  vitamines, 
which  are  present  in  the  hulls,  have  been  removed.  Meat,  on  the 
other  hand,  is  said  to  be  the  cause  of  various  diseases,  such  as 
gout,  arteriosclerosis,  kidney  affections,  etc. 

“As  far  as  the  price  of  this  yeast  is  concerned,  it  is  stated  that 
the  amount  purchaseable  with  1  Mark  (24  cents)  yields  904 
calories,  which  1  Mark’s  worth  of  beef  gives  only  623  calories, 
and  that  one  pound  of  dry  yeast  is  equivalent  to  3.3  pounds  of 
medium  beef. 

“As  mentioned  above,  the  economic  production  of  the  new  food 
yeast  could  not  possibly  have  been  of  such  enormous  importance 
if  the  German  chemists  had  not  also  provided  in  the  nitrogen  from 
the  air  a  new  and  profitable  source  for  the  manufacture  of  sul¬ 
fate  of  ammonium.  Hitherto  atmospheric  nitrogen  could  be 
utilized  only  where  cheap  water  power  was  available.  This  was 
solely  the  case  in  Norway,  and  consequently  very  large  plants 
were  established  there  in  which  nitrogen  obtained  from  the  air 
was  converted  into  nitric  acid  and  nitrates.  The  cost  of  power 
per  certain  units  in  Norway  was  about  $4.50,  compared  with 
$18,000  in  Niagara  Falls.  Owing  to  the  existence  of  inexhaustible 
deposits  of  lignite  coal  in  the  neighborhood  of  Cologne  and  in 
Anhalt  the  Germans  are  able  to  produce  the  same  unit  at  $7.50. 
Although  this  price  at  first  sight  is  higher  than  that  of  Norway, 
it  means  in  reality  greater  cheapness  all  around.  There  is  hardly 
any  industrial  development  in  Norway,  and  almost  all  chemicals 
and  apparatus  must  be  imported  and  the  finished  products  ex¬ 
ported.  As  this  is  not  necessary  in  Germany,  where  in  addition 
to  a  highly  organized  industry  there  exists  the  most  perfect  and 

68 


cheapest  inland  water  transportation  system,  the  price  of  $7.50 
compared  with  $4.50  in  Norway,  is  actually  cheaper. 

With  this  cheap  power  Germany  utilizes  the  nitrogen  from 
the  air  not  only  for  the  manufacture  of  nitric  acids  and  nitrates, 
but  also  for  the  production  of  ammonia,  ammonium  sulfate  and 
calcium  cyanamide.  Indeed,  new  nitrogen  compounds  have  been 
lately  discovered,  which  threaten  to  revolutionize  our  present 
system  of  fertilization.  This  new  industry,  to  which  the  war 
has  given  the  impetus,  has  assumed  such  dimensions  and  has 
given  such  unexpected  results,  that  the  Government  requested 
the  German  parliament  to  grant  an  imperial  monopoly  for  all 
these  nitrogenous  materials.  The  chemical  industries  are  fight¬ 
ing  such  measures  because  it  is  believed  that  they  would  interfere 
with  the  development  of  the  new  method.  From  the  documents 
published  relative  to  this  nitrogen  monopoly  it  appears  that 
chemical  compounds  have  been  discovered,  the  efficiency  of  which 
as  nitrogenous  fertilizers  allows  the  production  of  a  material 
suitable  as  an  universal  fertilizer.  Today  nitrogenous  fertilizers 
are  employed  mainly  in  two  forms,  namely,  as  saltpeter  (chile 
saltpeter),  which  is  a  nitric  acid  salt,  and  as  sulfate  of  ammonium, 
which  is  an  ammonium  salt.  It  is  the  task  of  the  intelligent 
farmer  to  decide  at  what  time  in  the  season  and  for  what  crops 
one  or  the  other,  or  mixtures  of  these  forms  must  be  employed. 
The  universal  nitrogenous  fertilizer  which  the  German  chemist 
has  discovered,  is  very  likely  a  new  substance  which  unites  the 
nitric  and  ammonia  forms  in  chemical  combination,  and  is  per¬ 
haps  more  economically  produced  than  nitrate  of  ammonium, 
which  is  already  known  as  such  a  compound,  and  in  great  favor  as 
artificial  fertilizer. 

‘‘That  this  new  scientific  achievement  will  prove  of  momentous 
importance  appears  from  the  fact  that  the  great  chemical  works 
which  supply  the  world  with  dyestuffs,  synthetic  remedies,  photo¬ 
graphic  developers,  artificial  perfume,  etc.,  have  entered  the 
field  and  have  become  important  factors  in  the  artificial  fertilizer 
industry  of  Germany.  The  peace  negotiations  will  undoubtedly 
culminate  in  the  conclusion  of  commercial  treaties  between  the 
nations.  What  an  enormous  power  will  be  exercised  by  that 
nation  when  possessing  such  a  universal  fertilizer  and  practically 
world-wide  monopoly  of  potash  salts  will  have  something  to 
sell  that  every  farmer  in  the  civilized  world  absolutely  requires. 

“There  will  be  a  big  rush  for  the  Teutonic  band  wagon  and  all 
the  ideas  of  a  nation  boycott  of  the  Germans,  or  of  an-  ostracism 
of  Germany’s  traders  and  manufacturers  will  quickly  vanish  in 
thin  air. 

“In  the  synthesis  of  ammonia,  either  pure  ammonia  itself,  or 

69 


ammonium  carbonate  is  obtained,  neither  of  which  are  suitable 
for  direct  employment  as  fertilizers  or  yeast  nutrient.  They  must 
first  be  changed  into  sulfate  of  ammonium  and  for  this  conversion 
sulfuric  acid  is  necessary.  This  latter  product  is  obtained  in 
Germany  very  largely  from  Spanish  ores,  or  from  sulfur  im¬ 
ported  from  the  United  States. 

“On  account  of  the  war  there  has  been  a  marked  advance  in 
the  prices  of  sulfuric  acid  and  the  problem  arose  how  to  procure 
the  acid  necessary  for  ammonium  sulfate  at  such  low  figures  as 
to  make  the  use  of  this  material  possible.  This  task  was  solved 
in  the  most  ingenious  manner.  In  Germany  large  quantities  of 
minerals  consisting  of  sulfate  of  calcium  (gypsum)  and  sulfate 
of  magnesium  are  found.  It  was  always  known  that  these 
chemicals,  in  reaction  with  ammonium  carbonate,  furnish  directly 
ammonium  sulfate,  but  no  practical  use  has  ever  been  made  of 
this  theoretical  fact.  The  exigencies  of  the  war,  however,  caused 
the  testing  of  this  reaction  on  a  factory  scale  and  today,  without 
the  use  of  foreign  material,  and  without  the  trouble  of  manu¬ 
facturing  sulfuric  acid — by  a  simple  chemical  transportation — 
the  desired  object  has  been  economically  and  successfully  at¬ 
tained. 

“In  their  endeavor  to  free  themselves  forever  from  the  importa¬ 
tion  of  ores  for  the  production  of  sulfuric  acid,  the  German 
chemists  went  one  step  further  and  succeeded  in  substituting 
these  domestic  materials,  namely,  sulfate  of  barium  and  magne¬ 
sium  for  the  Spanish  ores  and  our  sulfur.  Sulfate  of  barium  and 
magnesium  are  reduced  by  means  of  coal  to  their  sulphides, 
which  are  decomposed  by  carbonic  acid  into  the  carbonates  and 
sulphuretted  hydrogen.  The  latter  furnished  sulfurous  acid  and 
sulfur,  either  of  which  may  be  employed  for  the  manufacture  of 
sulfuric  acid.  And  so  sulfuric  acid  is  the  most  indispensable 
material  in  all  chemical  enterprises ;  the  war  thus  taught  the  Ger¬ 
man  chemist  how  to  render  his  country  independent  of  foreign 
trade  conditions  in  this  most  vital  branch  of  his  profession. 

“Bearing  in  mind  these  stupendous  efforts  expended  in  the 
manufacture  of  artificial  foodstuffs,  it  is  interesting  to  note  how, 
even  in  Germany,  where  economy  is  practiced  to  such  an  extent, 
valuable  sources  of  natural  food  materials  had  been  neglected 
in  time  of  peace. 

“When  the  English  blockade,  however,  threatened  to  starve  the 
women  and  children  of  the  empire,  a  careful  inventory  of  the 
natural  resources  was  taken.  It  was  ascertained  that  certain 
plants,  which  had  been  regarded  useless  weeds,  possessed  con¬ 
siderable  food  values.  Fourteen  wild  growing  vegetables  were 
found  which  furnished  substitutes  for  spinach,  while  five  plants 


70 


supplied  excellent  materials  for  salads.  But  of  still  greater  sig¬ 
nificance  is  the  fact  that  nature  offered  nine  varieties  of  rot 
rich  in  starch  and  affording  wholesome  aliment  for  man  and 
beast.  These  unexpected  sources  of  nutritive  material  will  in  the 
future  further  threaten  our  export  trade  to  Germany,  which 
has  so  largely  consisted  of  foodstuffs. 

“On  the  other  hand  the  following  demonstration  of  efficiency  is 
worthy  of  report: 

“Among  the  visitors  to  New  York  on  the  occasion  of  the  Inter¬ 
national  Congress  of  Applied  Chemistry,  in  1912,  were  two  pro¬ 
fessors  of  the  Agricultural  High  School  in  Berlin,  Dr.  Foth  and 
Dr.  Parrow,  who  both  are  well  remembered  by  their  American 
colleagues. 

“Scarcely  had  the  German  army  occupied  Belgium  and 
Northern  France  when  Dr.  Foth  was  called  there  to  supervise  the 
agricultural  resources  of  the  captured  territory,  and  Dr.  Parrow 
was  appointed  to  the  same  office  in  Russian  Poland.  Both 
scientists  at  once  took  charge  of  the  sugar  beet  and  potato  crops 
and  their  utilization  in  the  interest  of  the  invading  armies  and 
the  civilian  population. 

“We  are  also  exporting  large  quantities  of  oil  and  fats  to 
Germany,  especially  animal  fat  from  our  slaughter-house  in¬ 
dustries,  and  cotton-seed  oil.  By  a  treatment  with  hydrogen 
the  German  chemist  transformed  cheap  grades  of  oils,  fatty 
wastes  of  all  kinds,  and  most  important  of  all,  the  fish  oils  of  the 
Swedish  and  Norwegian  fisheries,  into  edible  fats.  Our  business 
in  these  materials  may  also  be  threatened  by  the  cultivation  of 
the  sunflower,  the  seed  of  which  furnishes  an  excellent  oil, 
which  is  already  largely  used  for  food  purposes  in  Russia.  As 
sunflowers  grow  almost  anywhere,  sufficient  seed  might  be  raised 
from  which  oil  could  be  obtained  as  substitute  for  our  cotton-seed 
oil.  For  Germany,  this  oil  would  be  of  further  advantage,  as 
when  mixed  with  the  distillation  products  of  lignite  coal  it  affords 
excellent  lubricating  oils  to  replace  our  best  cylinder  oil,  etc. 

“For  this  purpose  Italian  olive  oil  has  already  been  imported 
during  the  war  in  large  quantities,  but  this  traffic  is  now  inter¬ 
rupted  owing  to  Italy’s  entrance  into  the  war. 

“As  curiosities  in  the  search  for  foodstuffs  we  might  further 
mention  the  attempt  of  the  chemist  to  utilize  the  fresh  blood  of 
slaughtered  animals,  which  contains  highly  nutritious  substances. 
Long  before  the  war  bread  made  with  the  addition  of  fresh  blood 
to  the  dough  was  eaten  in  some  parts  of  Europe,  especially  in 
Finland.  This  tastes  like  black  rye  bread,  is  very  nutritious  and 
very  economical.  It  is  interesting  to  note  here  that  during  cer¬ 
tain  religious  festivities  a  confection  consisting  of  chocolate  and 

71 


fresh  blood  is  sold  in  Naples  and  eaten  by  the  ladies  with  great 
relish. 

“The  agricultural  chemist  has  also  undertaken  the  task  of  sup¬ 
plying  Germany  with  a  substitute  for  cotton  which  can  no  longer 
be  procured  from  us.  Although  it  is  realized  that  there  are 
enormous  difficulties  in  the  way,  a  great  deal  has  already  been 
accomplished.  Paper  spun  into  threads  in  special  machines 
serves  as  substitute  for  cotton  and  jute  in  the  manufacture  of 
bags,  etc.,  which  need  not  stand  heavy  wear  and  tear.  For  the 
manufacture  of  guncotton  cellulose  is  employed,  which  is  pro¬ 
duced  from  wood  pulp  by  the  various  refining  processes  now 
known.  By  a  preliminary  treatment  with  acid  and  steam  and 
subsequent  solution  in  liquids  such  as  Schweitzer’s  reagent,  in 
alkali-bisulfuric  of  carbon  (viscose  treatment),  common  wood 
pulp  is  converted  into  a  highly  purified  cellulose,  which  for  many 
nitration  purposes  is  superior  to  cotton  fiber.  It  has  already  been 
known  for  years,  that  for  the  manufacture  of  celluloid,  certain 
tissue  papers  give  better  results  than  cotton. 

“Millions  of  bales  of  cotton,  which  might  have  relieved  the 
congested  American  market,  and  might  have  yielded  large  profits 
to  our  Southern  farmers,  instead  of  lying  in  our  warehouses  or 
piers,  might  have  gone  up  in  smoke  (  ?)  as  smokeless  powder,  if 
the  Germans  could  have  imported  them  and  employed  them  for 
the  manufacture  of  guncotton,  etc. 

“Even  in  war  time  people  must  think  of  such  frivolous  things 
as  dresses  and  clothes  and  the  German  chemists  are  hard  put 
to  improvise  substitutes  for  the  ordinary  cotton  fabrics.  Curious 
to  relate,  they  have  made  marked  progress  in  this  respect.  The 
nettle  fiber,  which  was  largely  used  in  Europe  as  a  textile  ma¬ 
terial  prior  to  the  introduction  of  cotton,  has  again  attracted 
much  attention.  Most  interesting  reports  are  being  published 
and  patents  being  taken  out  for  the  utilization  of  the  last  fiber 
of  willow  bark.  Willow  boughs  are  valued  as  material  for 
weaving  baskets.  A  special  school  for  the  cultivation  of  willow 
trees — a  remarkable  demonstration  of  German  efficiency — exists 
in  Graudens,  West  Prussia.  Director  Brickwedel,  of  this  school, 
about  ten  years  ago,  suggested  the  use  of  the  last  fiber  of  willow 
bark  as  a  textile  fiber,  since  he  found  it  to  be  very  strong  and  of 
fine  structure.  It  surpasses  hemp  fibers  and  closely  approaches 
cotton  fiber  in  purity  and  textile  strength.  According  to  the 
patented  processes  the  bark  is  first  spread  and  dried  either  by 
exposure  to  the  air  and  sun  or  to  artificial  heat  in  a  drying  room. 
It  is  then  packed  in  small  holes,  which  may  be  kept  for  years 
without  injury  or  decomposition.  The  bark  is  then  treated  in  an 
alkaline  bath  for  about  five  to  eight  hours,  dried  and  freed  from 


72 


tannins,  and  then  mechanically  freed  from  wooden  fibers  like 
hemp  and  flax.  The  fiber  thus  obtained  furnishes  an  excellent 
substitute  for  cotton  and  is  especially  recommended  for  surgical 
purposes,  as  it  possesses  great  power  of  absorption.  It  also  fur¬ 
nishes  an  excellent  paper. 

'‘All  these  endeavors  to  substitute  cotton  may  appear  ridiculous 
to  us  who  have  been  brought  up  with  the  idea  that  "Cotton  is 
King,”  and  that  we  have  been  destined  by  fate  to  supply  this 
fiber  to  the  civilized  world.  The  farmers  who  cultivated  the 
madder  root  and  the  planters  who  raised  indigo  were  also  inclined 
to  jest  when  they  were  appraised  of  the  fact  that  German 
chemists  had  succeeded  in  reproducing  in  the  laboratories  the 
dyes  which  their  crops  furnished,  but  when  the  manufactured 
materials  drove  the  natural  products  from  the  markets  and 
left  the  farmers  and  planters  without  a  job,  hilarity  ceased.  His¬ 
tory  may  repeat  itself  and  willow  bark  and  nettle,  or  some  other 
substitute  raised  on  German  soil  may,  in  the  near  future,  depose 
King  Cotton.  The  German  chemist  has  a  duty  to  perform,  and 
with  his  perseverance  and  application  he  does  not  shrink  from 
any  problem  however  difficult  it  might  appear  to  outsiders. 

"The  rearing  of  silkworms  and  the  production  of  silk  are  also 
undertaken  with  great  zeal.  Mulberry  trees,  the  leaves  of  which 
are  fed  to  the  caterpillars,  thrive  very  well  in  South  Germany 
and  in  the  Rhine  province.  This  industry  is  to  be  developed, 
not  so  much  to  make  Germany  independent  of  the  importation  of 
raw  silk,  but  for  the  reason  that  this  occupation  oilers  easy  and 
profitable  work  to  war  cripples  and  invalids — work  which  can 
be  done  in  about  six  weeks  of  the  year. 

"The  chemist  has  also  succeeded  in  replacing  the  product  of  the 
camphor  tree,  which  before  the  war  had  been  obtained  from 
Japan,  and  is  of  great  importance  in  medicine  and  in  the  manu¬ 
facture  of  smokeless  powder.  It  is  now  made  artificially  in  the 
factory,  and  it  has  been  found  that  synthetic  camphor  not  only 
surpasses  the  natural  in  medicinal  efficiency,  but  that  it  is  of 
greater,  purity,  a  stronger  disinfectant  and  cheaper,  at  least  as 
long  as  war  prices  prevail. 

"The  German  chemist,  who  has  already  solved  the  problem  of 
manufacturing  synthetic  rubber,  will  perhaps  also  tackle  the 
problem  of  making  Germany  independent  of  rubber  imports  in 
another  direction.  The  milkweed  plant,  which  belongs  to  the 
Asclepias  family,  furnishes  a  latex  which  resembles  that  of  the 
cheaper  grades  of  rubber.  Although  the  amount  of  rubber  is 
small  and  the  quality  poor,  yet  the  chemist  need  not  despair  if 
he  remembers  that  the  sugar  beet  first  used  in  sugar-making 
contained  only  4  per  cent  of  a  very  superior  grade  of  sugar, 

73 


while  today  it  furnishes  22  to  24  per  cent  of  sugar  of  such  high 
quality  as  to  be  indiscribable  from  the  first  cane  sugar. 

“Great  ingenuity  is  displayed  by  the  metallurgical  chemist  in 
replacing  coppet  by  other  metals.  As  a  result,  the  consumption 
of  copper  for  use  for  war  purposes  and  for  the  arts  is  con¬ 
siderably  reduced.  With  its  inexhaustible  supply  of  iron  and 
steel,  and  its  wealth  of  zinc  and  a  domestic  supply  of  copper 
amounting  to  an  annual  production  of  40,000  tons,  Germany  is 
in  an  excellent  position  to  manufacture  substitutes  for  copper. 
Gun  and  rifle  cartridges,  and  the  fuse-heads  of  grenades  are 
made  of  soft  iron,  with  a  small  percentage  of  copper  and  zinc. 
Buttons,  button-facings  for  helmets,  belt  buckles,  which  were 
formerly  made  of  brass,  are  now  made  of  alloys  free  from 
copper. 

“In  the  electrical  industry  iron  and  steel  wire  are  used  ex¬ 
clusively.  Long  distance  electric  power  transmissions  are  being 
conducted  over  steel  cables  manufactured  of  aluminum. 

“In  machinery  construction  and  journal  bearings,  brass  is 
entirely  replaced  by  steel  and  iron.  Instead  of  massive  bronze, 
hollow  bronze  castings,  or  iron  or  steel  castings  coated  or  covered 
with  bronze,  are  employed. 

“Next  to  steel  and  iron,  aluminum  and  magnesium  play  a 
prominent  part  as  substitutes  for  copper.  It  has  been  found  that 
an  aluminum-magnesium  alloy  possesses  great  advantage  over 
the  latter  as  an  electrical  conductor.  Magnesium  is  said  to  be 
useful  for  many  purposes  for  which  aluminum  is  being  employed 
today.  This  is  a  very  important  discovery,  because  Germany  has 
enormous  supplies  of  magnesium  chloride,  a  by-product  of  the 
potash  industry,  which  has  been  considered  worthless  up  to  now. 
Two  large  factories,  started  during  the  war,  are  now  producing 
magnesium. 

“While  magnesium  may  thus  be  obtained  from  a  domestic 
source,  aluminum  has  been  hitherto  made  from  beauxite,  a 
mineral  imported  from  France.  The  necessities  of  the  war 
forced  the  chemist  to  look  for  a  domestic  raw  material  for  this 
important  metal.  He  now  uses  a  cheaper  grade  of  beauxite 
found  in  Carinthia,  Dalmatia  and  Hungary.  But  more  wonder¬ 
ful  still  he  has  succeeded  in  extracting  from  cheap  clays,  which 
are  found  in  great  abundance  throughout  Germany,  a  pure 
aluminum  which  serves  as  an  excellent  raw  material  for  the 
manufacture  of  aluminum.  Two  factories  are  working  these 
processes  and  Germany  will  remain  forever  independent  of  these 
foreign  countries,  Switzerland  and  the  United  States,  upon 
which  so  far  it  has  relied  for  supplies  of  this  metal. 

“Long  before  the  war  varied  uses  were  made  of  aluminum  in- 

74 


stead  of  copper,  and  in  recent  years  the  latter  has  successfully 
challenged  the  heavier  metal  in  almost  every  branch  of  electrical 
engineering. 

“According  to  a  statement  in  London  Times  of  January  15, 
1915,  aluminum  has  been  employed  on  most  of  the  more  im¬ 
portant  power  transmission  lines  of  recent  years,  the  two  largest 
power  plants  in  the  world  being  equipped  with  aluminum  con¬ 
ductors  exclusively,  one  alone  absorbing  nearly  3,000  tons  of  the 
metal.  Aluminum  is  also  used  largely  for  short  distance  power 
distribution  in  central  stations,  railways,  etc. ;  the  whole  of  the 
feeder  connections  in  the  new  Westminster  (London)  power 
station,  for  instance,  consists  of  aluminum,  while  the  entire  in¬ 
sulated  feeder  system  of  the  Paris  tramways  is  made  of  the 
same  metal,  the  latter  absorbing  several  hundred  tons. 

“It  has  been  estimated  that  in  America  20  per  cent  of  the  total 
output  of  aluminum  is  utilized  for  electrical  conductors.  The 
English  war  office  ranks  among  the  principal  consumers  of  the 
metal  for  this  purpose.  It  is  of  interest  to  record  that  Captain 
Scott,  of  Antartic  fame,  employed  aluminum  wire  for  the  port¬ 
able  telephone  installation  which  he  took  with  him  to  the  South 
Pole. 

“Actual  implements  of  war,  in  the  manufacture  of  which  the 
chemist  exhibits  his  remarkable  ingenuity,  are  the  various  kinds 
of  gun  powder,  explosives  and  primers  used  in  cartridges,  gren¬ 
ades,  shrapnels,  bombs,  torpedoes,  etc.  Each  of  these  instru¬ 
ments  of  destruction  requires  special  grades  and  mixtures  of 
smokeless  powder  and  of  high  explosives,  such  as  picric  acid, 
troty  (TNT),  etc.  All  these  materials  are  .produced  from 
nitric  acid  on  the  one  hand  and  cotton,  carbolic  acid  and  toluol  on 
the  other.. 

“Nitric  acid  is  generally  prepared  from  Chile  saltpeter  and 
sulfuric  acid,  but  in  Norway,  as  described  above,  it  is  made  from 
nitrogen  of  the  air  and  in  Germany  from  ammonia  and  calcium 
cyanamide,  which  themselves  are  obtained  from  the  nitrogen  of 
the  air. 

“These  recently  developed  sources  assure  tq  Germany  an  un¬ 
limited  supply  of  nitric  acid,  not  only  for  all  war  purposes,  but 
for  general  industrial  use. 

“Germany  has  also  an  inexhaustible  supply  of  benzol  and  toluol 
owing  to  her  vast  coking  industries  in  which  these  materials  are 
recovered  as  by-products.  As  regards  cotton,  however,  there  is 
greal  deficiency  and,  as  stated  before,  the  various  kinds  of  refined 
cellulose  and  paper  must  now  serve  for  the  production  of  smoke¬ 
less  powder. 

“In  view  of  the  fact  that  this  country  is  furnishing  vast 

75 


amounts  of  ammunition  to  the  Allies,  it  may  be  instructive  to  de¬ 
scribe  how  his  export  has  affected  our  legitimate  chemical  indus¬ 
tries.  How  great  the  injury  inflicted  is,  the  following  instances 
will  show:  Nitric  acid,  which  we  make  from  Chile  saltpeter  and 
sulfuric  acid,  has  advanced  from  3^  cents  per  pound  to  14  cents 
and  at  present  cannot  be  bought  at  all. 

“The  same  is  true  of  sulfuric  acid.  In  fact  there  is  such  a 
demand  for  this  acid  that  one  manufacturer  of  legitimate 
chemicals  is  compelled  to  ship  it  in  tank  cars  from  the  Pacific 
Coast  and  pay  for  goods  worth  $15.00  a  ton  $30,000  in  freight. 

“The  havoc  thus  wrought  in  our  industries  is  irreparable,  benzol 
and  toluol,  which  are  the  most  important  starting  materials  for 
the  production  of  dyestuffs  and  synthetic  remedies  are  unfor¬ 
tunately  also  employed  in  the  manufacture  of  high  explosives, 
and  therefore  at  present  are  not  available  for  the  needs  of 
humanity.  , 

“Benzol,  which  cost  about  25  cents  per  gallon  before  the  war 
now  costs  $1.00  per  gallon,  and  toluol  which  has  always  been 
cheaper  than  benzol  is  sold  at  present  at  the  exorbitant  price  of 
$5.00  a  gallon. 

“Benzol  furnishes  phenol  which  in  turn  is  converted  into  picric 
acid  by  nitration;  from  toluol  trinitroluol,  which  as  an  explosive 
is  superior  to  picric  acid,  is  derived  in  the  same  manner.  Phenol, 
our  most  common,  effective  and  cheapest  disinfectant,  has  be¬ 
come  well-nigh  a  luxury.  While  previous  to  the  war  it  sold  at 
about  9  cents  per  pound,  it  now  fetches  $1.50  per  pound. 

“The  prices  of  trinitroluol  have  been  the  subject  of  parlia¬ 
mentary  inquiries  in  England,  from  which  it  appeared  that  the 
product  was  sold  to  the  English  Government  at  $1.00  per  pound 
and  to  the  French  and  Russians  at  $1.35  per  pound.  Even  at 
the  cost  of  $5,000  per  gallon  of  toluol,  meaning  about  65  cents 
per  pound  from  which  3  pounds  of  trinitroluol  are  produced, 
these  prices  afford  enormous  profits  to  the  American  brokers, 
because  one  pound  of  trinitroluol  only  costs  about  30  cents  to 
produce.  The  poor  allies,  France  and  Russia,  thus  pay  him  $1.00 
clear  profit  for  every  pound  of  the  much  desired  trinitroluol. 

“However  gratifying  such  profits  might  be  they  become  insig¬ 
nificant,  and,  in  fact  turn  into  heavy  losses,  when  we  consider  our 
legitimate  industries  are  suffering.  For  every  workingman 
profitably  employed  in  the  manufacture  of  arms  and  ammunition 
there  are  at  least  one  hundred  idle  laborers  in  the  textile  in¬ 
dustries.  • 

“For  the  one  firm  of  J.  P.  Morgan  and  Company,  the  huge  war 
contract  profits  of  which  have  been  repeatedly  and  unfavorably 
criticised  in  the  English  Parliament,  there  are  thousands  of 

76 


Southern  bankers  whose  money  is  tied  up  in  unsaleable  cotton. 
The  profits  in  our  exports  in  arms  and  ammunition  are  wiped 
out  by  the  vast  loss  of  money  due  to  our  inability  to  import  dye¬ 
stuffs,  potash  salts,  cyanide  of  potassium,  sugarbeet  seeds,  etc., 
which  he  hitherto  bought  from  Germany  and  of  which  our 
farmers,  our  textile  industries,  our  miners  are  so  badly  in  need. 

“How  seriously  our  manufacturing  and  trade  interests  are 
threatened  appears  from  an  excellent  editorial  in  the  New  York 
Times,  of  July  12,  1915,  from  which  the  following  is  quoted: 

“Imports  consist  principally  of  goods  which  enter  directly  into 
manufacture,  remanufacture  of  industrial  consumption,  all  re¬ 
quiring  labor  in  some  form,  so  that  when  imports  fall  there  must 
be  a  corresponding  unemployment  of  labor. 

“The  United  States  has  suffered  a  greater  loss  on  account  of 
the  war  than  any  other  neutral  nation.  All  that  can  be  said  of 
the  profits  arising  from  the  trade  in  war  munitions  is  that  they 
somewhat  offset  the  enormous  loss  directly  owing  to  the  same 
cause.  The  profits  of  the  war  trade  are  theatrical,  and  they  fall 
into  a  few  hands  and  are  advertised  more  than  they  deserve  to 
be.  The  greater  loss  falls  upon  trade  and  industry  at  large.  There 
is  probably  not  a  wage-earner  in  this  country  who  has  not  at 
some  point  of  contact  adversely  felt  the  war,  either  in  what  he 
earns  or  in  the  price  of  what  he  buys,  or  both.  Investors  feel  it 
much.  The  rise  in  the  rate  of  interest  abroad  is  a  direct  hard¬ 
ship  to  them,  because  it  affects  the  rate  of  interest  here,  and  as 
that  rises  the  market  value  of  old  securities  falls.  Credit  by 
hundreds  of  millions  is  extended  to  the  Allies,  in  order  that  they 
may  buy  here.  This  credit  might  otherwise  be  going  into  works 
of  development  at  home — works  which  in  their  construction  would 
create  a  big  demand  for  labor  and  which  when  finished  would  be 
permanent  additions  to  the  wealth-producing  machine  of  all  the 
people. 

“These  things  are  so  obvious  that  if  it  were  put  to  a  vote  of 
commercial-minded  people  to  continue  or  end  the  war,  purely  as 
a  business  matter,  even  the  manufacturer  of  war  munitions  would 
undoubtedly  vote  with  all  the  rest  to  end  it.  Why?  Because  the 
profits  from  war  contracts  are  fickle,  whereas  just  the  normal 
growth  of  industry  in  time  of  peace  is  enough  for  the  imagination 
and  capital  of  the  American  people  to  cope  with.  To  argue  that 
the  United  States  has  a  selfish  interest  in  this  war  is  to  betray 
either  ignorance  or  prejudice.  We  would  much  rather  sell  Europe 
the  goods  normally  consumed  in  time  of  peace  and  take  in  pay¬ 
ment  therefor,  not  gold  which  we  do  not  need,  nor  credit  which 
we  could  use  ourselves,  but  other  goods.” 

That  is  a  strong  argument  for  an  embargo  on  all  exports  to  all 

77 


belligerent  nations,  which,  as  everybody  concedes,  would  end  the 
war  more  quickly  than  any  other  measure.  The  fearful  unem¬ 
ployment  of  our  labor  and  the  great  losses  of  our  trade  and 
industry  at  large  can  only  be  prevented  by  a  quick  end  of  the  war. 

“No  discussion  of  this  subject  would  be  complete  without  a 
mention  of  the  most  modern  instruments  of  war  evident  by  the 
chemists,  namely,  the  poison-gas  bombs,  the  fire  liquid  and  the 
incendiary  bombs. 

“At  about  the  middle  of  last  February  the  war  correspondents 
reported  that  the  French  were  using  a  material  called  Turpinit, 
after  its  inventor,  Turpin,  which  was  described  as  a  most  deadly 
weapon.  It  was  said  to  asphyxiate  the  soldiers  in  the  trenches 
and  its  explosion  near  a  herd  of  cows  killed  the  animals  so  instan¬ 
taneously,  though  dead  they  were  found  in  a  standing  position, 
presenting  all  the  appearance  of  life.  The  dead  soldiers  in  the 
trenches  also  remained  in  the  attitudes  which  they  had  assumed 
at  the  very  moment  they  were  overwhelmed  by  the  poison  gas. 

“The  gas  used  seems  to  have  been  a  nitrous  oxide  compound 
similar  to  that  employed  in  medicine  as  an  anaesthetic. 

“About  the  end  of  April,  the  Germans  began  to  use  poison  gas 
which,  according  to  the  journalistic  reports,  appears  to  be  liquified 
chlorine.” 

Nothing  has  as  yet  been  published  about  the  fiery  liquids  which 
the  belligerents  are  using,  but  concerning  the  composition  of  the 
incendiary  bombs  dropped  upon  London,  a  coroner’s  inquest  gives 
the  following  details : 

“The  bombs  contained  an  explosive  called  Thermit.  It  gave  off 
enormous  heat,  as  much  as  5,000,  and  set  everything  on  fire  that 
it  touched.  Thermit  is  a  mixture  of  powdered  aluminum  and 
magnetic  iron  oxide  used  in  welding  iron  and  steel  and  in  repair¬ 
ing  broken  steel  castings.  When  this  mixture  is  ignited,  the 
oxygen  leaves  the  iron  and  combines  violently  with  the  aluminum, 
producing  a  slag  which  rises  to  the  surface,  the  molten  steel 
sinking  to  the  bottom.  The  heat  evolved  by  the  reaction  is  enor¬ 
mous  and  a  temperature  can  be  obtained  second  only  to,  that  of 
the  electric  arc.” 

Mr.  Garvan.  This  is  not  a  political  measure.  Our  trustees 
are  four  Republicans  and  one  Democrat.  Our  officers  are  Repub¬ 
licans  and  Democrats.  Nobody  knew  what  their  politics  were 
until  this  question  was  raised  by  the  suggestion,  as  you  will  always 
find  is  done  by  the  German  cartel  and  its  representatives  in  this 
country. 

Senator  Nugent.  The  trustees,  I  assume,  are  in  favor  of  the 
licensing  system  ? 

Mr.  Garvan.  They  are. 


78 


Gentlemen,  this  thing  burnt  into  our  minds  throughout  the  past 
two  years,  but  I  do  not  think  anything  brought  it  to  my  mind 
so  clearly  and  distinctly  as  did  the  fact  that  after  the  armistice 
airships  flew  over  the  sea ;  and  during  that  same  week  that  those 
ships  flew  between  England  and  America,  the  Department  of  the 
Interior  exhibited  in  a  little  vial  a  new  gas  that  they  had  discov¬ 
ered  but  had  not  put  into  the  war,  and  it  was  asserted  by  our 
army  officials  that  five  airplanes  could  carry  over  New  York 
enough  gas  in  one  night  to  annihilate  the  5,000,000  inhabitants  of 
that  city.  Where  are  we  going  to  get  any  protection  from  such 
gas  in  the  future?  There  is  only  one  protection  possible,  and 
that  is,  for  a  country  that  might  send  some  airships  over  here 
with  that  gas  to  know  that  we  can  send  back  ships  the  next  night 
and  annihilate  the  people  of  the  city  that  manufactured  it. 

The  Germans  would  never  have  gone  into  the  war  without  a 
consciousness  or  a  feeling  of  the  superiority  of  their  chemical 
industry.  They  went  into  the  war,  in  fact,  or  got  ready  for  the 
war  the  day  in  1913  when  they  had  perfected  their  nitrate  plants 
and  were  independent  of  the  seas. 

Gentlemen,  in  these  two  years  we  have  learned  to  know  that 
this  was  an  industrial  war,  brought  on  by  industrial  Germany  in 
her  lust-made  haste  to  capture  the  markets  of  the  world.  Indus¬ 
trial  Germany,  in  its  arrogance  and  pride,  preferred  the  formid¬ 
able  hazard  of  battle  to  the  progressive  and  sure  infiltration  which 
within  ten  or  twenty  years  might  well  have  given  her  the  world 
domination  she  sought  from  complacent  and  unthinking  peoples. 
Industrial  Germany  was  in  control  of  imperial  Germany;  indus¬ 
trial  Germany  sympathized  and  participated  in  the  preparation  for 
this  war;  industrial  Germany  waged  this  war;  and  industrial 
Germany  was  the  first  to  see  defeat  and  forced  the  military  peace, 
in  order  that,  with  her  industrial  equipment  intact,  she  might 
continue  that  same  war  by  intensified  and  concentrated  economic 
measures.  It  was  Germany’s  chemical  supremacy  that  gave  her 
confidence  in  her  avaricious  dream  of  world  empire ;  it  was  Ger¬ 
many’s  chemical  supremacy  that  enabled  her  to  wage  four  years 
of  pitiless  warfare ;  and  it  is  Germany’s  chemical  supremacy  upon 
which  she  relies  to  maintain  the  war,  and  for  that  supremacy 
he  pays  homage  to  her  dye  industry  and  counts  upon  that  dye 
industry  to  maintain  it.  Since  1866  Germany  has  recognized  the 
fact  that  upon  the  development  of  the  dye  industry  rested  her 
entire  development  of  organic  chemistry,  and  that  upon  the  de¬ 
velopment  of  organic  chemistry  rested,  in  an  ever-increasing 
measure,  all  the  development  of  modern  business  and  modern 
warfare. 

And  so  she  cherished  the  industry  with  wisdom  and  prevision 
while  it  was  still  in  its  childhood,  and  by  her  patience,  by  her 

79 


persistence,  by  the  willingness  of  her  people  to  sacrifice  in  unsel¬ 
fish  cooperation,  she  gradually  transferred  the  plans  made  in  the 
year  1866  into  the  reality  of  today,  and  now  she  realizes  that  her 
dye  industry  constitutes  her  keenest  wedge  with  which  to  force 
her  way  back  into  the  world  trade.  She  calls  the  dye  industry 
her  chief  “protective  industry,”  and  has  laid  out  for  it  a  program 
of  state  protection  and  aid  which  should  startle  us.  She  proposes 
to  use  the  alleged  necessity  of  the  world  for  her  dyes  to  force  all 
her  other  exports.  In  other  words,  she  proposes  to  use  it  as  a 
club  with  which  to  fight  her  way  back  into  commercial  society. 

Gentlemen,  Dr.  Albert  and  Bernstorff  reported  to  their  govern¬ 
ment  that  America  could  never  establish  the  dye  and  pharma¬ 
ceutical  industry  in  this  country,  as  we  lacked  the  moral  power 
for  the  creation  of  such  an  industry ;  that  here  each  party  pursued 
its  own  selfish  interests,  but  nobody  kept  the  whole  in  mind ;  that 
this  problem  could  only  be  solved  through  regard  for  all  points 
of  view,  and  that  the  conflicting  selfishness  of  this  country  ren¬ 
dered  that  solution  impossible.  Wrong;  wrong;  as  ever,  wrong! 
Let  them  await  the  answer  of  American  patriotism,  American 
sacrifice,  and  American  ability! 

We  felt  that  we  would  like  to  be  a  part  in  the  taking  of  the 
forces  of  science  developed  by  them — which  they  have  only  turned 
to  the  desolation  and  destruction  of  mankind — and  placing  them 
in  the  hands  of  what  we  believe  to  be  a  higher  and  purer  civili¬ 
zation,  to  see  if  we  cannot,  out  of  the  terrible  mess  of  this  war, 
do  something  constructive  with  these  same  scientific  forces,  do 
something  to  direct  them  into  the  channels  of  alleviation  and 
helpfulness  to  humanity.  It  is  only  to  give  American  principles 
and  character  a  chance  that  we  ask  you  to  hold  these  people  off 
until  we  get  our  education.  Then  we  can  meet  them  without  any 
tariff. 

I  thank  you,  gentlemen  of  the  committee. 


80 


STATEMENT  OF  MR.  HENRY  B.  THOMPSON 

Granville ,  Delaware;  President  of  the  United  States  Finishing 

Company,  with  offices  No.  320  Broadway,  New  vork;  and 

Chairman  of  the  Advisory  Committee  on  Dyes,  of  the  War 

Trade  Board  Section  of  the  Department  of  State. 

Senator  Curtis.  How  large  a  company  is  yours  ? 

Mr.  Thompson.  Our  company  consists  of  five  plants  in  New 
England,  two  in  Connecticut,  and  three  in  Rhode  Island.  Our 
capitalization  is  $6,000,000.  We  do  work  on  commission  for  the 
converters,  and  handle  products  worth  about  $75,000,000  a  year. 

I  have  been  chairman  of  this  committee  advisory  to  the  War 
Trade  Board  since  May,  and  I  wanted  to  appear  here  as  a  wit¬ 
ness  in  favor  of  the  licensing  bill,  but  I  suppose  the  time  for  that 
appearance  has  passed.  However,  I  feel  in  justice  to  our  com¬ 
mittee,  inasmuch  as  a  number  of  statements  which  were  made  on 
yesterday  are  absolutely  false,  as  we  think,  that  we  should  rebut 
the  testimony  offered  by  Colonel  Wood,  and  with  your  permis¬ 
sion  I  will  make  a  statement  which  we  have  prepared : 

The  Advisory  Committee  on  dyes  of  the  War  Trade  Board 
section  of  the  Department  of  State  desires  to  reply  to  some  of 
the  statements  which  were  made  by  Colonel  Wood  in  his  testi¬ 
mony  of  December  11,  for  the  purpose  of  correcting  some  mis¬ 
statements  and  making  some  explanations. 

In  spite  of  disclaimers  to  the  contrary,  the  committee  is  quite 
clear  that  Colonel  Wood’s  testimony  contains  insinuations  and 
inferences,  the  intent  of  which  is  to  convey  the  impression  that 
the  members  of  the  Advisory  Committee  have  used  their  official 
position  for  the  unfair  advantage  of  private  interests.  We  are 
willing  to  allow  the  personal  reputation  of  the  members  of  the 
committee  and  of  the  companies  they  represent  to  stand  as  a 
refutation  of  the  insinuation. 

In  reply  to  the  statement  that  the  consumer  members  were  not 
representative  of  their  trades,  an  inquiry  into  the  standing  of  the 
companies  which  they  represent  and  the  nature  of  the  products 
which  they  produce  will  be  a  sufficient  answer  to  the  inaccuracies 
of  the  statement. 

Colonel  Wood  stated  that  consumers  advocating  the  license  who 
were  satisfied  with  the  American  product  which  they  were  using 
should  not  attempt  to  say  that  other  industries  not  thus  satisfied 
should  not  receive  what  they  need.  No  consumers  propose  any 
such  limitation,  and  the  license  plan  specifically  provides  that  they 

81 


should  be  allowed  to  import  what  they  need,  provided  it  is  not 
made  in  this  country,  satisfactory  as  to  terms  of  price,  quality 
and  delivery. 

The  committee  has  been  charged  with  negligence,  inefficiency, 
ignorance,  and  delay.  The  following  brief  history  of  the  facts  in 
the  case  since  the  appointment  of  the  committee  will  be  of  interest 
in  this  connection : 

On  May  20,  the  President  sent  a  message  to  Congress  recom¬ 
mending  that  the  dye  industry  receive  the  necessary  protection  for 
its  preservation,  and  on  this  same  date  the  War  Trade  Board 
announced  the  appointment  of  the  committee. 

Prior  to  the  appointment  of  the  committee,  the  War  Trade 
Board  had  adopted  the  policy  of  permitting  importations  of  com¬ 
modities  from  the  occupied  parts  of  Germany  only  when  such 
importations  would  be  of  benefit  to  the  United  States  as  a  whole. 
Dyes  and  dyestuffs  in  the  opinion  of  the  War  Trade  Board  par¬ 
took  of  the  nature  of  those  commodities,  the  importation  of  which 
would  not  benefit  the  United  States  as  a  whole.  No  importa¬ 
tions  of  commodities  from  the  unoccupied  parts  of  Germany  were 
authorized  until  July  14,  1919,  because  it  was  not  until  that  date 
that  the  Allied  and  Associated  Governments  decided  to  lift  the 
blockade. 

In  order  to  determine  whether,  conditions  having  changed,  dyes 
and  dyestuffs  might  partake  of  the  nature  of  those  commodities, 
the  importation  of  which  would  benefit  the  United  States  as  a 
whole,  the  Advisory  Committee  recommended  to  the  War  Trade 
Board  the  issuance  of  questionnaires  to  consumers  and  producers 
of  dyes. 

Accordingly,  on  June  9,  a  questionnaire  was  sent  to  producers 
of  dyes  for  the  purpose  of  ascertaining  their  production.  On 
June  16  and  30,  a  similar  questionnaire  was  sent  to  four  thou¬ 
sand  consumers. 

As  a  result  of  this  investigation,  the  decision  was  reached,  and 
an  announcement  sent  to  the  effect  that  “having  due  regard  to  all 
existing  conditions,  there  appears  to  be  no  such  need  for  German 
dyestuffs  in  the  United  States  as  to  warrant  the  issuance  of 
licenses  for  the  importation  of  any  of  these  articles.”  The  com¬ 
mittee  recommended  to  the  Department  of  State  that  these  exist¬ 
ing  conditions  be  explained  to  the  consumers.  The  following  is 
our  letter  of  recommendation : 

“July  24,  1919. 

“The  Honorable, 

“The  Secretary  of  State, 

“Washington,  D.  C. 

“Sir: 

“It  is  desirable  to  make  plain  to  the  consumers  of  dyestuffs  the 

82 


exact  status  of  the  present  temporary  control  exercised  by  the 
Department  of  State  over  the  importation  of  dyestuffs  of  Germari 
origin.  For  the  present  no  licenses  whatsoever  are  being  granted 
for  dyes  produced  or  manufactured  in  Germany,  and  it  is  the 
opinion  of  this  committee  that  this  policy  should  be  adhered  to 
for  this  reason.  Upon  the  ratification  of  the  Peace  Treaty  under 
Annex  VI,  paragraphs  I  to  5  inclusive,  of  that  Treaty,  there  will 
become  immediately  available  to  American  consumers  needed 
dyestuffs  in  adequate  quantities  at  prices  and  under  safeguards 
to  be  fixed  by  the  Reparation  Commission. 

“The  need  is  not  so  urgent  today,  due  to  the  available  Swiss 
and  English  dyes  which  are  being  freely  admitted,  as  to  warrant 
this  committee  recommending  the  importation  of  German  dyes, 
because  under  present  conditions  they  would  in  all  probability  be 
brought  in  through  the  old  German  agencies  who  are  using  every 
effort  to  regain  Germany’s  hold  on  the  dyestuff  industry  in  this 
country.  We  believe  the  disadvantages  of  importing  through 
these  agencies  outweighs  the  present  needs  of  the  American  con¬ 
sumers.  Any  course  which  admits  without  control  German  dyes 
into  this  country  between  the  present  time  and  the  final  action  of 
Congress  would,  in  our  judgment,  seriously  endanger  the  future 
of  our  growing  American  dyestuff  and  chemical  industry,  which 
is  so  vital  to  our  industrial  and  national  welfare,  by  flooding  our 
market  with  a  mass  of  German  dyestuffs  which  would  anticipate 
our  requirements  for  years  to  come. 

“We  recommend  that  paragraphs  1  to  5  inclusive,  of  Annex 
VI,  of  the  Peace  Treaty,  be  made  public  and  that  public  announce¬ 
ment  be  made  immediately  of  the  above  policy.” 

Advisory  Committee  on  Dyes  to  the  War  Trade  Board 

We  suppose  that  this  letter  is  the  basis  of  the  charge  that  it 
was  the  intention  of  the  Advisory  Committee  and  the  War  Trade 
Board  that  importers  of  dyestuffs,  American  citizens,  should  be 
driven  out  of  business.  A  thoughtful  glance  at  its  contents  will 
show  the  exact  contrary  and  that  the  intention  of  the  committee 
was  to  avoid  allowing  the  German  manufacturers  to  consolidate 
their  position  for  an  attack  upon  our  American  dye  industry  and 
to  avoid  anticipating  the  action  of  Congress.  If  further  evidence 
of  the  fairness  of  the  committee  upon  this  point  is  needed,  it  will 
be  found  in  the  fact  that  the  War  Trade  Board  made  a  ruling 
recommended  by  the  committee  permitting  the  importers  to  im¬ 
port  through  the  Textile  Alliance  for  their  customers  upon  an 
equal  footing  with  their  customers,  except  in  the  one  particular 
that  consumers’  requirements  placed  with  the  Textile  Alliance 
direct  were  given  preference  in  the  order  of  their  allocation  over 

83 


those  placed  through  the  importers  as  to  the  pro  rata  distribu¬ 
tion  of  the  Reparation  Dyes  only. 

The  conditions  referred  to  above  were : 

1.  The  prospects  of  an  early  signing  of  the  Peace  Treaty  which 
would  make  the  Reparation  Dyes  available  for  distribution  among 
the  Allies  and  the  United  States. 

2.  A  supply  of  dyes  from  Switzerland  and  England  was  com¬ 
ing  in  and  alleviating  the  situation. 

3.  With  a  very  limited  number  of  exceptions,  no  urgent  wide¬ 
spread  need  had  yet  been  emphatically  manifested. 

4.  At  that  time  the  foreign  goods  containing  German  vat  dyes 
were  not  coming  into  the  country,  so  far  as  we  were  informed,  in 
competition  with  American-made  goods  colored  with  non-vat 
dyes. 

5.  We  interpreted  public  opinion  as  expressed  through  the 
daily  press  and  in  numerous  trade  journals  and  resolutions  of 
users  of  dyes  bearing  many  hundred  signatures  as  practically  a 
mandate  to  us  to  not  break  down  the  barrier  against  the  impor¬ 
tation  of  German  dyes  until  it  could  be  done  without  danger  to 
our  industry,  as  Congress  might  decide. 

On  August  12,  the  shirt  manufacturers  requested  a  hearing 
which  took  place  on  August  26,  and  was  not  managed  by  the 
President  of  the  Chemical  Foundation  and  a  representative  of 
one  of  the  dye  manufacturers,  as  stated  by  Colonel  Wood,  but 
by  the  Chief  of  Sections  of  the  War  Trade  Board.  The  shirt 
manufacturers  were  given  an  opportunity  to  state  their  difficulties. 
They  met  with  the  fullest  frankness  and  co-operation,  evidence  of 
which  is  found  in  the  letter  of  their  Secretary,  a  copy  of  which 
follows : 

“ August  27,  1919. 

“Mr.  Lawrence  Bennett, 

“War  Trade  Board  Section, 

“Department  of  State, 

“Washington,  D.  C. 

“Dear  Sir: 

“In  behalf  of  the  National  Association  of  Shirt  Manufacturers, 
I  beg  to  thank  the  members  of  the  War  Trade  Board  Advisory 
Committee  and  Mr.  Garvan  as  well  as  yourself,  for  the  coopera¬ 
tion  given  us  yesterday  and  the  courtesies  extended  to  us. 

“We  feel  that  the  solution  of  the  difficulties  arrived  at  by  your 
Board  will  not  only  be  of  most  valuable  assistance  to  the  Shirt 
Industry  at  this  critical  time,  but  also  to  the  entire  textile  industry 
and  the  consuming  public. 

“Our  members  in  attendance  yesterday  surely  are  enthused  over 
the  progress  made  by  the  American  dye  manufacturers  and  take 

84 


this  opportunity  of  saying  that  we  shall  support  them  to  the  limit 
and  will  give  all  the  publicity  that  we  can  offer  to  the  consuming 
public  when  their  vat  colors  are  available. 

“Yours  very  truly, 

(Signed)  “Ralph  Hunter, 

“Chairman  Dyes  Committee  ” 

It  was  agreed  that  six  months’  requirements  should  be  licensed 
and  that  the  Advisory  Committee  on  Dyes  and  the  War  Trade 
Board  would  make  every  effort  to  see  that  all  obstacles  were 
removed  which  limited  their  ability  to  secure  the  needed  dyes. 
The  only  part  which  the  President  of  the  Chemical  Foundation 
took  in  the  meeting  was  to  assure  the  shirt  manufacturers  that 
he  would  make  every  effort  to  have  a  representative  sent  to 
France  and  to  persuade  the  consumers  to  form  an  importing 
organization  which  would  be  ready  to  receive  German  dyes  by 
the  time  they  were  ready  to  arrive  in  this  country.  Accordingly 
Dr.  Herty  sailed  for  France  September  3,  as  the  representative 
of  the  Chemical  Foundation.  The  only  part  of  prominence  taken 
by  the  representative  of  a  dye  manufacturer  was  to  explain  to 
the  meeting,  upon  the  request  of  one  of  the  shirt  manufacturers 
what  progress  the  company  which  he  represented  had  made 
toward  producing  the  needed  dyes. 

Colonel  Wood  stated  that  licenses  would  not  have  been  granted 
as  the  result  of  the  hearing  of  the  shirt  manufacturers  if  the 
committee  had  not  been  forced  to  do  so  through  the  pressure  of 
their  protest.  The  facts  are  that  in  the  conference  the  shirt  manu¬ 
facturers  convinced  the  committee  and  the  War  Trade  Board  by 
presenting  their  fear  that  English  goods  would  be  brought  in  dyed 
with  German  vat  dyes  which  would  destroy  the  market  for  their 
goods  dyed  with  non-vat  dyes,  that  the  time  had  arrived  when 
the  need  for  German  dyestuffs  in  this  country  outweighed  the  dis¬ 
advantages  previously  referred  to  above. 

The  explanation  of  the  allocation  of  alizarine  black  B  to  the 
Princeton  Worsted  Mills  and  the  refusal  of  an  allocation  to  the 
Pequea  Mills  is  as  follows :  The  Princeton  Worsted  Mills  applied 
for  alizarin  black  B,  Schultz-  No.  774-B,  whereas  the  Pequea 
Mills  applied  for  an  allocation  certificate  for  alizarin  black  B, 
Schultz  No.  862.  The  Schultz  numbers  here  mentioned  refer  to 
dyes  of  different  chemical  composition. 

An  explanation  of  negotiations  from  this  time  on  will  be  given 
by  the  representative  of  the  Textile  Alliance  and  others,  whose 
testimony  will  demonstrate  to  you  where  to  assign  the  respon¬ 
sibility  for  recent  delays. 

I  think  we  were  entirely  justified  in  the  position  we  took  at  that 
time,  due  to  the  fact  that  we  only  received  answers  from  4  per 

85 


cent  of  the  4,000  questionnaires  sent  out,  that  there  was  any  need 
for  the  importation  of  German  dyestuffs.  Shortly  after  that  the 
shirt  makers  applied  to  the  War  Trade  Board,  stating  their  needs. 
Their  needs  were  for  a  very  small  amount  of  dyestuff,  and  under 
the  circumstances  we  felt  that  it  would  be  wise  for  the  War  Trade 
Board  to  grant  those  licenses.  But  in  order  to  find  out  the  exact 
condition  of  the  stuff  that  was  in  the  hands  of  the  Reparation 
Committee,  Dr.  Herty  was  sent  abroad  in  order  to  find  out  the 
amounts  for  the  means  of  importation. 

The  accusation  has  been  made  over  and  over  again  that  there 
was  delay,  and  I  think  the  intention  of  the  testimony  in  criticism 
of  our  committee  has  been  that  this  method  of  our  handling  of 
this  whole  question  of  importation  would  be  a  sample  of  the 
handling  of  a  Licensing  Board  which  would  come  under  this  bill. 
In  answer  to  that  we  simply  say  this : 

That  no  member  of  the  Advisory  Committee  on  Dyes  pretends 
for  a  moment  that  the  temporary  arrangement  which  has  been  in 
existence  was  an  ideal  one.  It  was  an  emergency  measure,  de¬ 
signed  as  a  temporary  expedient  to  meet  extraordinary  conditions, 
and  because  of  its  very  nature  and  of  necessity,  with  the  limited 
authority  of  the  committee,  it  operated  slowly.  They  looked  upon 
their  part  in  it  as  a  public  duty  which  they  attempted  to  dis¬ 
charge  conscientiously  and  to  the  best  of  their  ability  at  consider¬ 
able  personal  inconvenience.  This,  however,  must  not  be  accepted 
as  proof  that  a  permanent  organization  operating  with  the  author¬ 
ity  of  a  government  department,  with  a  sufficient  force  of  men 
devoting  their  entire  time  to  the  subject,  with  experts  at  their 
call,  and  with  fully  tabulated  and  constantly  revised  estimates  of 
requirements  and  production,  cannot  function  properly. 

This  statement,  prepared  in  writing,  has  appended  to  it: 

“This  statement  has  been  read  and  approved  by  the  War  Trade 
Board  Section. 

“Very  respectfully, 

“Advisory  Committee  on  Dyes, 

“War  Trade  Board  Section, 
“Department  of  State. 
“Henry  B.  Thompson, 
“Franklin  W.  Hobbs, 

“Frank  D.  Cheney, 

“August  Merz, 

“Citas.  H.  Herty.” 

I  should  like  to  file  with  the  reply  of  our  committee,  a  memo¬ 
randum  which  has  been  issued  privately,  or  at  least  it  has  been 
mailed  in  envelopes  without  any  card  thereon,  indicating  the  per- 

86 


son  or  place  of  mailing,  bearing  the  signature  of  six  manufac¬ 
turers. 

“Memorandum  in  Opposition  to  the  Purchase  by  the  Gov¬ 
ernment  Through  the  Textile  Alliance,  or  Other 
Official  Agency,  of  Dyes  Directly  From  the 
Foreign  Manufacturers. 

“The  War  Trade  Board  (by  executive  order  of  the  President, 
now  the  War  Trade  Board  Section  of  the  Department  of  State) 
so  far  as  the  control  of  imports  is  concerned,  derives  its  authority 
from  Section  II  of  the  Trading  with  the  Enemy  Act,  which  was 
admittedly  enacted  purely  as  a  war  measure.  During  the  period 
of  the  active  prosecution  of  the  war  the  War  Trade'Board  func¬ 
tioned  solely  as  a  war  agency  and,  through  its  Bureau  of  Imports, 
restricted  and  controlled  the  importation  of  various  commodities 
in  its  efforts  to  conserve  tonnage  and  to  divert  it  to  war  usages. 
In  administering  its  regulations  it  caused  serious  hardship  and 
heavy  financial  losses  to  the  numerous  importing  concerns  and 
other  industries  dependent  upon  importations,  but  it  was  met  on 
all  sides  with  the  fullest  cooperation  and  wholehearted  support 
of  the  very  men  whom  its  regulations  affected  most  seriously. 
The  necessity  for  the  import  restrictions  disappeared,  however, 
after  the  signing  of  the  Armistice  of  November  n,  1918,  and 
within  two  months  thereafter  few  of  these  restrictions  remained 
in  force,  and  the  various  departments  of  the  War  Trade  Board 
were  rapidly  dissolving.  Notwithstanding  many  impressive  re¬ 
quests  for  the  continuance  of  some  of  the  import  restrictions  in 
order  to  protect  industries  or  to  stabilize  prices,  it  was  only  the 
control  over  the  importaion  of  dyes,  dyestuffs  and  related  chem¬ 
icals  of  German  origin  that  was  maintained.  This  action  was  an 
exception  to  the  policy  of  the  State  Department  that  such  pro¬ 
tective  measures  appeared  to  be  the  exclusive  prerogative  of  the 
Congress  and  that  to  impose  or  maintain  restrictions  for  such  pur¬ 
poses  would  be  a  clear  case  of  supererogation  on  the  part  of  the 
War  Trade  Board. 

“An  advisory  committee  on  dyes,  on  which  consumers  and 
manufacturers  were  intended  to  have  equal  expert  representation, 
had  been  appointed  by  the  War  Trade  Board. 

“An  advisory  committee  on  dyes,  on  which  consumers  and 
manufacturers  were  intended  to  have  equal  expert  representation, 
had  been  appointed  by  the  War  Trade  Board.  F^om  a  member¬ 
ship  of  seven,  at  least  two  were  officers  of  the  largest  and  most 
powerful  dye  manufacturing  companies  whose  interest  it  is  to 
stamp  out  competition  in  the  dye  industry  and  to  create  a 
monopoly  under  its  own  control  which  would  be  nothing  short 
of  an  unlawful  restraint  of  trade.  One  of  these  two  men  assumed 

87 


to  act  as  the  official  representative  of  the  government,  assumed 
to  dictate  the  policies  to  be  followed,  and  assumed  to  limit  the 
attendance  at  various  hearings  that  were  held,  to  these  only  whose 
interests  were  friendly  to  the  dye  manufacturer.  This  same  com¬ 
mittee  which  was  intended  to  have  fair  representation  from  con¬ 
sumer  as  well  as  manufacturer  early  in  the  summer  of  1919,  sub¬ 
mitted  a  report  to  the  War  Trade  Board,  upon  which  the  latter 
on  July  26,  1919,  made  an  announcement  (W.  T.  B.  R.  819),  in 
which  it  was  said : 

“  ‘As  the  result  of  a  careful  survey  of  the  present  situation  in 
the  dye-consuming  industry  and  the  unanimous  opinion  of  the 
Advisory  Committee  on  Dyes,  and  having  due  regard  to  all  exist¬ 
ing  conditions,  there  appears  to  be  no  such  need  for  German 
dyestuffs  in  the  United  States  as  to  warrant  the  issuance  of 
licenses  for  the  importation  of  any  of  these  articles.’ 

“This  brought  forth  violent  protests  from  the  consumers  and 
they  made  it  clear  to  the  War  Trade  Board  Section  that  unless 
they  could  receive  a  quantity  of  German  dyes  to  meet  their  imme¬ 
diate  requirements,  they  would  be  put  to  unnecessary  hardship, 
trouble  and  expense,  and  would  be  at  a  disadvantage  in  competi¬ 
tion  with  foreign  textiles. 

“Towards  the  end  of  August  there  was  a  meeting  in  Wash¬ 
ington  at  the  War  Trade  Board  Section  of  the  State  Depart¬ 
ment,  of  consumers,  particularly  those  in  the  shirt  trade.  Al¬ 
though  the  press  announced  this  to  be  an  open  meeting,  admission 
was  granted  only  to  a  selected  few.  The  Oil,  Paint  and  Drug 
Reporter  of  October  20,  1919,  page  25,  evidently  referring  to 
this  meeting,  said: 

“  ‘But,  more  than  that,  they  protested  that  recent  activities  in 
Washington  in  regard  to  the  dyestuff  industry,  had  become  in¬ 
volved  in  a  most  mysterious  maze.  Stories  became  rife  that  when 
consumers  sought  to  lay  the  facts  of  their  needs  before  govern¬ 
ment  officials,  they  had  been  met  by  representatives  of  American 
manufacturers  and,  after  being  entertained,  sent  on  their  way 
without  having  accomplished  what  they  came  for,  and  carrying 
away  with  them  little  reminders  to  “patronize  home  industries.” 

“In  the  same  issue  it  is  also  said,  at  page  27 : 

“  ‘Some  of  the  consumers  say  that  when  they  came  here  or 
sought  to  get  the  facts  about  their  needs  before  government  offi¬ 
cials,  they  were  taken  in  charge  practically  by  representatives  of 
one  of  the  big  dye  manufacturers,  entertained  at  luncheon  and 
otherwise,  and  conducted  on  a  tour  of  inspection  through  the 
company’s  plant  near  here,  being  urged  to  patronize  home  in¬ 
dustries.’ 

“One  of  the  chief  hosts  of  this  tour  was  none  other  than  the 

88 


member  of  the  Dye  Advisory  Committee  to  whom  reference  has 
already  been  made. 

“Promise  was  made  to  the  consumers  at  this  meeting  that 
action  would  be  taken  within  forty-eight  hours  to  furnish  them 
with  six  months  supply  of  vat  dyes  of  German  origin,  and  which 
the  American  manufacturers  admitted  they  could  not  furnish. 
The  consumers  heard  nothing  further  until  the  appearance  of  a 
circular  letter  dated  October  i,  1919,  over  the  signature  of  the 
Bureau  of  Imports.  Following  this  letter  a  telegram  purporting 
to  have  been  sent  by  the  War  Trade  Board  in  October  was 
received  by  consumers.  This  telegram  announced  that  the  Textile 
Alliance,  Inc.,  had  been  designated  as  sole  official  agency  to  admin¬ 
ister  the  provisions  of  the  plan  referred  to  in  the  letter  of  October 
1.  Following  this  telegram,  another  circular  letter  dated  October 
10,  1919,  was  sent  out  by  the  Bureau  of  Imports  of  the  War 
Trade  Board,  giving  further  detail  in  regard  to  the  agency  of 
the  Textile  Alliance,  Inc. 

“There  was  much  confusion  caused  by  the  telegram  and  sub¬ 
sequent  letter  issued  over  the  name  of  the  War  Trade  Board  Sec¬ 
tion,  making  this  announcement.  Neither  made  it  clear  that  the 
Textile  Alliance  was  to- procure  only  those  dyes  under  the  control 
of  the  Reparation  Commission.  In  response  to  many  inquiries, 
it  was  stated  by  the  War  Trade  Board  Section  of  the  State 
Department  that  consumers  need  not  take  advantage  of  the  agency 
of  the  Textile  Alliance  (which  was  to  operate  at  cost  and  which 
would  procure  the  dyes  at  peace-time  prices  considerably  lower 
than  the  market  prices),  but  that  the  consumer  could  procure  his 
allotted  supply  directly  from  the  foreign  manufacturers  through 
whatever  channels  the  consumer  cared  to  use.  Acting  in  accord¬ 
ance  with  these  announcements,  a  large  number  of  licenses  for  the 
importation  of  German  dyes  directly  from  the  manufacturers 
were  issued  by  the  War  Trade  Board  Section  of  the  State  Depart¬ 
ment  to  importers  upon  the  written  request  of  consumers  duly 
endorsed  upon  their  allocation  certificates. 

“Because  the  War  Trade  Board  Section  had  no  definite  infor¬ 
mation  as  to  the  amount  of  dyes  that  could  be  obtained  through 
the  Reparation  Commission,  nor  the  prices  which  would  be 
charged,  Dr.  Herty  was  sent  abroad  in  October  as  a  representa¬ 
tive  of  the  State  Department  upon  a  limited  mission,  to  make 
inquiries  and  to  complete  arrangements  between  the  Textile 
Alliance  and  the  Reparation  Commission.  Upon  his  arrival  he 
found  that  the  Reparation  Commission  could  supply  but  thirty 
per  cent  of  the  six  months’  allotment  which  the  War  Trade  Board 
Section  on  August  27,  1919,  had  promised  the  consumers  in  this 
country.  He  then  found  that  the  remaining  seventy  per  cent 

89 


Could  be  obtained  directly  from  the  manufacturers,  although  at 
the  present  market  price,  and  it  is  said  that  an  offer  was  made 
to  him  by  a  representative  of  the  dye  manufacturers  to  furnish 
him  such  amount.  The  State  Department  has  stated  that  the 
Textile  Alliance  has  been  authorized  to  accept  this  offer,  and  it  is 
also  reported  that  Dr.  HUerty  obtained  a  personal  option.  In¬ 
formation  has  been  received,  however,  that  no  option  was 
obtained  for  Indanthrene  dyes.  How  the  offer  came  to  be  made 
in  the  first  instance  is  not  clear.  It  has  been  reported  that  Dr. 
Herty,  in  his  official  capacity,  sought  this  offer  and  obtained  it 
upon  a  representation  that  the  President  of  the  United  States 
desired  it. 

“If  these  negotiations  are  consummated  and  the  Textile 
Alliance  becomes  the  sole  official  agency  for  securing  both  the 
dyes  controlled  by  the  Reparation  Commission  and  the  dyes  pur¬ 
chased  directly  from  the  manufacturer,  the  Alliance  will  then  be 
in  a  position  with  which  no  individual  private  concern  can  com¬ 
pete.  The  current  market  price  of  dyes  is  approximately  seven 
times  the  price  quoted  by  the  Reparation  Commission  and,  there¬ 
fore,  the  Alliance  by  averaging  the  two  prices  will  be  able  to 
supply  the  consumer  with  dyes  at  a  price  considerably  lower  than 
that  which  the  private  concern,  purchasing  its  dyes  directly  from 
the  manufacturer,  could  do.  Apparently  the  manufacturers  of 
dyes  do  not  oppose  this,  although  at  the  same  time  they  vehem¬ 
ently  express  fear  that  the  Germans,  if  given  the  opportunity, 
will  cut  prices  below  cost,  to  undersell  the  American  dye.  Evi¬ 
dently  such  practice  is  objectionable  to  them  only  if  it  works 
against  the  monopoly. 

“The  result  of  this,  of  course,  would  compel  consumers  to 
effect  their  importations  exclusively  through  the  designated  official 
agency.  The  designation  of  such  official  agency  is  a  form  of 
paternalism  most  objectionable  and  unnecessary,  and  would  par¬ 
take  of  the  nature  of  an  exclusive  monopoly,  and  such  exclusive 
monopoly  is  repugnant  in  that  it  would  be  a  discrimination  against 
American  citizens  who  were  engaged  in  the  business  of  importing. 
Such  action  is  directly  contrary  to  the  expressed  policy  of  the 
State  Department,  as  stated  in  a  letter  sent  in  November  last  to 
the  Hon.  Stephen  G.  Porter,  from  the  office  of  the  Foreign  Trade 
Advisor  of  the  Department  of  State,  over  the  signature  of  Van  S. 
Merele-Smith,  and  also  in  a  letter  reported  to  have  been  written 
by  Secretary  of  State  Lansing  to  the  Hon.  M.  J.  Sinnott.  Fur¬ 
thermore,  it  works  actual  injustice  to  those  importing  concerns 
who  have  been  granted  import  licenses,  and  who  have  taken  steps 
to  procure  from  the  manufacturers  in  Germany  the  amount  of 
dyes  covered  by  such  licenses.  They  have  established  large  credits 

90 


abroad  and  have  incurred  other  heavy  expenses.  Upon  the  grant¬ 
ing  of  the  import  licenses  by  the  War  Trade  Board  Section  of 
the  State  Department,  and  upon  assurance  from  the  authorities 
that  the  dyes  licensed  could  be  procured  from  any  source  other 
than  through  the  Reparation  Commission,  and  feeling  confident 
that  the  situation  as  explained  by  the  department  would  not  be 
further  changed  or  complicated  by  additional  rulings,  but  rather 
that  aid  would  be  given  by  the  government  to  expedite  shipments, 
the  importer  procured  the  necessary  export  licenses  from  the 
proper  authorities  abroad.  Of  course  such  export  licenses  would 
not  have  been  issued  by  the  United  States.  When  it  became 
known  that  the  Alliance  would  be  able  to  furnish  a  full  six 
months’  supply  at  the  reduced  price,  importers  holding  licenses 
surrendered  them  to  their  customers  in  order  that  the  customer 
might  take  advantage  of  the  lower  price  by  purchasing  through 
the  Alliance.  The  importers  were  influenced  in  this  action  by  a 
rumor  current  among  consumers  that  the  Textile  Alliance  would 
undertake  to  procure  for  any  consumer  all  of  his  allotment  of 
dyes  or  none  at  all;  in  other  words  that  the  Textile  Alliance 
would  preclude  any  importer  from  obtaining  any  portion  of  the 
dyes  from  the  Reparation  Commission  unless  the  consumer  would 
empower  the  Textile  Alliance,  by  an  assignment  of  his  license 
to  it,  to  procure  his  full  allotment. 

“Although  it  may  be  true  that  the  Alliance  offered  to  furnish 
the  importing  concerns  with  the  amount  of  dyes  for  which  they 
held  licenses,  such  offer  is  not  of  much  worth  to  the  importer. 
In  fact  no  business  could  afford  to  accept  an  offer  of  that  sort. 
The  Alliance  would  sell  to  the  consumer  and  to  the  importer  at 
the  same  price,  and  therefore  the  importer  would  have  to  sell  to 
his  customer  at  a  price  higher  than  that  quoted  by  the  Alliance. 
The  importer  would  become  a  mere  conduit  and  serve  no  useful 
purpose  whatsoever.  It  therefore  appears  that  although  upon  the 
face  of  it  an  equal  opportunity  is  gvien  to  everybody,  the  importer 
as  well  as  the  consumer,  the  practical  effect  of  the  Textile 
Alliance  becoming  the  sole  official  agency  for  the  purpose  of  pro¬ 
curing  the  entire  six  months’  allotment  of  dyes  is  to  deprive  an 
importing  concern  of  its  business  by  destroying  its  usefulness. 
The  functions  performed  by  the  importer  are  too  well  known  to 
need  explanation.  Their  usefulness  to  the  consumer  is  conceded. 
There  can  be  no  wish  anywhere  to  drive  importers  out  of  business. 
There  must  be  some  special  reason  for  attempting  to  do  so  in  this 
instance  and  the  circumstances  indicate  all  too  clearly  that  this 
reason  is  the  desire  on  the  part  of  some  of  the  American  manu¬ 
facturers  to  create  and  maintain  a  monopoly  of  the  entire  dye 
industry.  Although  the  Alliance  has  promised  to  do  whatever  it 

91 


t 


undertakes  at  cost,  it  has  given  no  definite  agreement  of  just  what 
it  will  do.  Because  of  the  fact  that  it  now  holds  nearly  all  the 
import  licenses  that  have  been  issued,  it  will  have  complete  control 
of  the  situation,  if  it  is  now  permitted  to  import  dyes  from  private 
sources  in  addition  to  those  under  the  control  of  the  Reparation 
Commission.  It  will  be  in  a  position  to'  discriminate  between  the 
consumer  or  his  agent,  the  actual  consignees  appearing  on  each 
license,  to  the  extent  of  the  kind  of  dye  it  will  allot  to  each 
licensee.  In  other  words,  it  will  be  in  a  position  to  give  one  con¬ 
sumer  or  group  of  consumers  who  show  friendly  feeling,  the  dye 
which  such  consumer  seeks;  whereas  on  the  other  hand  it  could 
force  an  unfriendly  consumer  to  take  a  substitute  which  may  or 
may  not  be  just  as  good. 

'There  is  no  reason  for  this  unusual  procedure.  The  war  is 
at  an  end,  actually  if  not  technically.  War-time  emergency 
measures  are  no  longer  justified.  So  far  is  it  from  any  prospect 
of  Germany  flooding  the  American  market,  that  it  is  doubtful  if 
the  immediate  needs  of  the  American  consumer  can  be  met.  This 
is  becoming  generally  admitted,  and  definite  information  is  from 
time  to  time  disclosed.  England,  France,  Belgium  and  Italy  have 
been  procuring  German  dyes  for  some  time,  and  have  no  doubt 
by  this  time  taken  most  of  the  kind  needed  here.  There  appears 
to  be  no  detailed  information  on  these  points,  but  when  the  full 
facts  are  known,  it  may  very  well  be  that  the  United  States  will 
be  bending  all  efforts  to  secure  all  German  dyes  available. 

“Consumers  have  stated  that  they  prefer  to  secure  their  supply 
through  pre-war  channels,  using  the  agencies  with  which  they  are 
accustomed,  and  upon  which  they  have  relied  in  the  past,  and  from 
which  they  have  procured  goods  of  known  quality.  They  have 
expressed  their  wish  that  they  do  not  desire  to  procure  these  dyes 
through  any  government  agency,  for  although  it  may  be  reason¬ 
ably  guaranteed  that  the  dyes  will  be  as  represented,  they  will 
not  be  certain  of  their  quality;  they  will  not  know  that  all  the 
dyes  of  the  same  sort  will  re-act  in  the  same  way  when  used  by 
them.  As  a  matter  of  course,  consumers  prefer  to  deal  with 
those  with  whom  contract  relations  may  be  made  definite  and 
certain,  and  to  whom  they  can  look  for  prompt  adjustment. 

“Not  only  is  the  consumer  deprived  of  the  free  choice  of 
obtaining  the  dyes  from  what  sources  he  chooses  and  in  the 
manner  he  chooses,  but  he  is  forced  to  accept  dyes  of  different 
manufacture,  and  which  may  in  the  process  to  which  he  may  put 
them  work  out,  if  not  unsatisfactorily,  at  least  in  a  way  other 
than  anticipated.  Furthermore,  some  of  the  dyes  from  one  manu¬ 
facturer  may  re-act  differently  on  different  goods  than  dyes  of 

92 


another  manufacturer.  In  any  event  they  may  be  compelled  to 
use  dyes  with  which  they  may  not  be  familiar. 

“Some  importers  who  had  received  large  numbers  of  applica¬ 
tions  had  been  advised  by  their  correspondents  in  Germany  of 
the  quantity  and  the  price  at  which  the  dyes  could  be  obtainable. 
This  disposes  of  any  argument  to  the  effect  that  this  scheme  was 
adopted  in  order  to  facilitate  and  expedite  the  importation  of  the 
admittedly  much-needed  dyes.  Had  this  scheme  not  been  formed 
the  importer  would  have  been  left  free  not  only  according  to  the 
regulations,  but  free  in  fact  and  free  from  any  force  of  circum¬ 
stances.  Many  shipments  of  dyes  would  now  be  on  the  water, 
and  the  delay  in  receiving  dyes,  already  more  than  three  months 
since  prompt  action  was  promised,  would  not  be  longer  pro¬ 
tracted.  There  is  general  feeling  of  dissatisfaction  among  the 
consumers,  which  is  due  in  no  small  measure  to  the  impression 
created  by  a  chain  of  circumstances  that  the  so-called  dye  advisory 
committee  in  conjunction  with  Dr.  Herty  have  not  acted  openly 
and  frankly  toward  the  public,  and  that  the  official  authority  and 
power  given  them  has  been  availed  of  to  benefit  private  interest. 
It  is  thought  that  the  situation  has  not  been  fully  disclosed  even 
to  the  members  of  the  Senate  Finance  Committee.  It  is  thought 
possible  that  the  Textile  Alliance  has  been  misled  into  action  in 
the  interest  of  the  American  dye  manufacturers -without  full  con¬ 
sideration  of  the  plight  of  the  consumers.  It  is  submitted  that 
interests  of  consumers,  upon  whom  are  dependent  about  2,000,000 
laborers  in  the  various  allied  industries,  and  who  have  invested 
capital  of  over  $3,500,000,000,  should  be  considered  to  the  extent 
at  least  of  securing  as  speedily  as  possible  those  dyes  which  are 
not  yet  manufactured  in  this  country.  To  this  there  can  be  no 
just  or  sound  objection. 

“It  is,  therefore,  urged  that  the  expressed  policy  of  the  State 
Department  should  be  adhered  to ;  that  the  Government  should 
not  embark  upon  the  business  of  procuring,  importing  and  dis¬ 
tributing  the  dyes,  nor  should  it  act  in  the  capacity  of  agent  in 
any  respect.  American  business  should  not  be  forced  to  stop  by 
indirection.  Freedom  of  action,  while  within  legal  bounds,  must 
be  maintained.  Production  must  be  encouraged,  not  hampered. 
Labor  must  be  given  full  opportunity  to  earn;  capital  must  not  lie 
idle.  Delay  is  fatal  to  the  stabilizing  of  American  business  con¬ 
ditions. 

“The  State  Department,  therefore,  should  evolve  a  plan  to  Limit 
the  agency  of  the  Textile  Alliance  to  secure  only  those  German 
dyes  which  are  controlled  by  the  Reparation  Commission,  and  to 
enable  a  consumer  to  procure  his  allotment  in  such  manner  as  he 

93 


may  deem  best — partly  through  the  Alliance,  and  partly  or  entirely 
directly  from  the  foreign  manufacturer. 

“December  i,  1919. 

“Respectfully  submitted, 

“Pequea  Mills  Co., 

“P.  W.  Andrews,  Treasurer, 
“Philadelphia,  Pa. 

“Kent  Mfg.  Co., 

“Everett  L.  Kent,  President, 

“Clifton  Heights,  Pa. 

“Globe  Dye  Works, 

“D.  R.  Greenwood, 

“Philadelphia,  Pa. 

“Brehm  &  Stehle, 

“Wm.  H.  Brehm, 

“Philadelphia,  Pa. 

“E.  L.  Maupai, 

“F.  P.  Maupai  Dyeing  Co., 

“West  New  York,  N.  J. 

“Sunbury  Converting  Works, 

“John  J.  Steller,  Supt., 

“Sunbury,  Pa. 

“J.  H.  &  C.  K.  Eagle,  Inc., 

“C.  F.  Brahler,  Supt.  Dye  Works, 
“Shamokin,  Pa. 

“Aberfoyle  Mfg.  Co., 

“W.  J.  Galey,  Jr.,  Secretary, 

“Chester,  Pa. 

“G.  J.  Littlewood  &  Sons, 
“Philadelphia,  Pa. 

“Weiss,  Willheim  &  Co.., 

“By  William  Willheim, 

“New  York  City. 

“Edward  Moir,  President, 

“Brown  Mills, 

“Auburn,  N.  Y.” 

The  first  signature,  Pequea  Mills  Co.,  is  Colonel  Wood’s  Com¬ 
pany.  And  is  signed  by  ten  other  manufacturers. 

I  would  like  to  file  with  it  a  letter  from  the  owners  of  the 
Sunbury  Converting  Works,  asking  that  they  be  allowed  to  with¬ 
draw  their  name,  as,  they  say,  their  signature  was  obtained  by  an 


94 


agent  of  the  Pequea  Mills  Company  under  a  mis-statement  of 
facts : 

“Sunbury  Converting  Works, 

“Sunbury,  Pa.,  December  4,  1919. 

“S.  S.  M.  New  York: 

“Attention  of  Mr.  Hurd.- 

“Referring  to  the  petition  which  the  writer  signed  in  regard  to 
the  importation  of  dyestuffs,  I  wish  to  state  that  I  signed  this 
article  on  Monday,  December  1.  Within  my  recollection,  this 
was  a  petition  that  asked  for  the  importation  of  dyestuffs  through 
the  former  agencies,  and  it  would  have  no  interference  whatso¬ 
ever  with  any  orders  which  we  recently  placed  with  the  ‘Textile 
Alliance/  In  other  words,  it  has  nothing  to  do  with  the  orders 
that  we  have  placed  through  the  ‘Textile  Alliance/  either  for  vat 
or  any  other  colors. 

“I  told  the  man  who  represents  the  Kuttroff,  Pickhardt  Com¬ 
pany  that  we  had  placed  our  orders  with  the  ‘Textile  Alliance/ 
and  he  said  ‘that  part  of  it  was  all  right/  and  he  asked  whether 
we  would  in  future  be  in  favor  of  getting  the  colors  again  through 
their  agencies,  the  same  as  we  did  before  the  war ;  he  stated  that 
they  would  keep  the  colors  in  stock  for  us  and  we  could  draw 
on  these  colors  the  same  as  we  did  heretofore. 

“As  far  as  the  writer  recalls,  this  is  not  being  done  with  the 
intention  of  interfering  with  any  efforts  of  the  ‘Textile  Alliance’ 
on  those  orders  which  we  have  placed  with  them,  but  that  it  is 
only  for  future  orders  which  we  might  need  in  these  respective 
colors. 

“If  this  in  any  way  inter fers  with  any  arrangements  that  you 
have  made,  I  am  very  sorry  that  I  did  it,  but  I  signed  this  petition 
with  good  intentions  and  for  the  above  stated  reasons.  In  the 
future,  should  any  such  matters  come  up  before  me,  I  shall  call 
you  on  the  ’phone  and  consult  with  you  before  signing  any  such 
petitions. 

“Sunbury  Converting  Works.” 

Senator  Watson.  How  does  that  throw  any  light  on  the  ques¬ 
tion  of  the  manufacture  of  dyes  in  this  country  or  the  necessity 
for  a  tariff  or  a  license  system  ? 

Mr.  Thompson.  It  is  simply  this:  If  you  will  read  this  state¬ 
ment  which  we  have  prepared  and  which  I  will  not  take  up  your 
time  to  read,  you  will  find  that  argument  is  attempted  all  through 
the  testimony  to  prove  inefficiency  on  the  part  of  our  committee, 
and  that  that  should  be  used  against  any  permanent  licensing  plan. 
Of  course  it  is  a  matter  of  opinion,  and  I  will  not  burden  you,  as 
the  time  is  short  with  reading  this  statement,  but  I  think  we  can 
prove  very  conclusively  by  absolute  facts  and  records  on  file  at 

95 


the  State  Department,  that  the  statements  in  that  paper  sent  out 
by  Colonel  Wood  are  false,  and  we  so  state  in  this  statement. 
The  inference  is,  as  I  read  it,  that  the  inefficiency  of  our  com¬ 
mittee  must  be  a  guide  for  you  gentlemen  to  decide  upon  the 
policy  of  a  licensing  committee  for  the  future.  In  the  testimony 
here,  as  I  have  listened  to  it  this  afternoon,  I  have  heard  a  good 
deal  that  surprises  me,  as  it  is  absolutely  contrary  to  my  own 
personal  experience.  We  are  large  users  of  dyestuffs  and  are 
naturally  interested  in  the  matter,  in  fact,  we  have  to  get  dye¬ 
stuffs  in  order  to  keep  our  mills  running. 

Senator  Curtis.  You  may  go  on  with  your  statement,  Mr. 
Thompson. 

Mr.  Thompson.  The  attention  of  the  Advisory  Committee  on 
dyes  of  the  War  Trade  Board  Section  of  the  Department  of  State 
has  been  directed  to  a  statement  dated  December  i,  1919,  signed 
by  some  eleven  consumers  of  dyestuffs  in  the  United  States,  and 
entitled :  “Memorandum  in  Opposition  to  the  Purchase  by  the 
Government,  through  the  Textile  Alliance,  or  other  Official 
Agency,  of  Dyes  Directly  From  the  Foreign  Manufacturer.”  The 
Advisory  Committee  is  informed  that  this  memorandum  has  been 
circulated  in  pamphlet  form  among  users  of  dyes  in  this  country. 

The  memorandum  contains  so  many  misleading,  untrue  and 
malicious  statements  that  the  Advisory  Committee  feels  con¬ 
strained  to  express  its  comments  thereon  in  order  to  dispel  the 
false  impression  it  may  have  created. 

On  page  2,  in  paragraph  2,  of  the  memorandum,  the  following 
statement  appears :  “An  Advisory  Committee  on  dyes,  on  which 
consumers  and  manufacturers  were  intended  to  have  equal  expert 
representation,  have  been  appointed  by  the  War  Trade  Board.” 
The  obvious  purpose  of  this  statement  is  to  create  the  impression 
that  consumers  and  manufacturers  did  not  have  equal  represen¬ 
tation  on  the  committee.  The  personnel  of  the  committee  consists 
of  three  consumers,  three  manufacturers  and  one  representative 
of  the  American  Chemical  Society,  who  is  neither  a  consumer  nor 
a  manufacturer. 

Paragraph  2,  page  2,  contains  the  following  additional  state- 
men  :  “Of  the  committee  membership  of  seven,  at  least  two  were 
officers  of  the  largest  and  most  powerful  dye  manufacturing  com¬ 
panies  whose  interest  it  is  to  stamp  out  competition  in  the  dye 
industry  and  to  create  a  monopoly  under  its  own  control  which 
would  be  nothing  short  of  unlawful  restraint  of  trade.”  The 
functions  of  the  committee  were  such  as  to  require  the  represen¬ 
tation  and  expression  of  the  viewpoint  of  manufacturers  for  the 
purpose,  not  only  of  making  recommendations  concerning  the 
extent  to  which  the  needs  of  consumers  might  be  satisfied  from 

96 


CORRECTION 


On  pages  94  and  95  of  the  pamphlet  containing  state¬ 
ments  of  Mr.  Thompson,  Mr.  Patterson  and  Mr.  Garvan 
the  statement  is  made  in  Mr.  Thompson’s  testimony  that 
the  signature  of  the  Sunbury  Mills  to  the  “Memorandum 
in  Opposition  to  the  Purchase  by  the  Government 
Through  The  Textile  Alliance,  or  Other  Official  Agency, 
of  Dyes  Directly  from  Foreign  Manufacturers”  was  ob* 
tained  “by  an  agent  of  the  Pequea  Mills  Company  under 
a  misstatement  of  facts.” 

This  is  untrue.  It  should  read  that  the  statement 
referred  to  was  obtained  by  an  agent  of  the  Kuttroff 
Pickardt  Company. 


domestic  sources,  but  also  for  the  purpose  of  making  recommenda¬ 
tions  in  relation  to  the  protection  of  the  industry.  The  committee 
denies  that  any  one  of  its  members  was  ever  influenced  or  swayed 
in  his  official  functions  by  any  consideration  of  individual  private 
interest.  The  statement  hereinabove  last  quoted  fails  also  to  take 
into  account  the  fact  that,  even  if  any  member  of  the  committee 
had  attempted  to  function  for  its  own  particular  private  interests 
and  not  for  the  benefit  of  the  industry  and  of  the  consumers  as 
a  whole — which  is  emphatically  denied — the  decisions  of  the  com¬ 
mittee  in  every  case  were  unanimous.  In  addition,  such  decisions 
were  never  final  and  were  never  intended  to  be  final.  The  com¬ 
mittee  has  always  functioned,  and  now  functions,  solely  in  an 
advisory  capacity  to  the  War  Trade  Board  and  to  the  War  Trade 
Board  Section  of  the  Department  of  State,  with  whom  the  ulti¬ 
mate  decision  has  rested,  and  now  rests,  in  every  case.  In  this 
particular,  the  committee  takes  occasion  to  state  that  several  of 
its  unanimous  recommendations,  which  were  agreed  upon  in  the 
belief  that  they  would  benefit  manufacturers  and  consumers  as 
a  whole,  were  not  accepted  by  the  War  Trade  Board  Section  of 
the  Department  of  State  because  they  might  tend  to  operate  to 
the  prejudice  of  importers. 

The  committee  challenges  those  whose  names  are  signed  to  the 
memorandum  to  point  out  a  single  case  in  which  the  committee 
has  sought  to  further  individual  private  interests.  The  com¬ 
mittee  has  sought  to  protect  the  industry  as  a  whole,  with  due 
regard  to  the  rights  and  interests  of  consumers.  This  policy  did 
not  originate  with  the  committee,  but  had  been  definitely  decided 
upon  by  the  War  Trade  Board  long  before  the  committee  was 
appointed. 

Paragraph  2,  page  2,  also  contains  the  following  statement : 
“One  of  those  two  men  assumed  to  act  as  the  official  representa¬ 
tive  of  the  government,  assumed  to  dictate  the  policies  to  be  fol¬ 
lowed,  and  assumed  to  limit  the  attendance  at  various  hearings 
that  were  held  to  those  only  whose  interests  were  friendly  to  the 
dye  manufacturer.”  These  statements  are  absolutely  untrue. 
No  member  of  the  committee,  except  Dr.  Herty,  who  is  neither 
manufacturer  nor  consumer,  “assumed  to  act  as  the  official  rep¬ 
resentative  of  the  government,”  and  any  such  attempt  would  have 
failed  for  lack  of  authority.  The  statement  that  one  of  the  mem¬ 
bers  of  the  committee  “assumed  to  dictate  the  policies  to  be  fol¬ 
lowed”  is  untrue.  The  policies  were  invariably  formulated  by 
the  War  Trade  Board  Section  upon  the  unanimous  recommenda¬ 
tion  of  the  committee  and  a  representative  of  the  War  Trade 
Board  Section  attended  personally  all  the  meetings  of  the 
Advisory  Committee.  Nor  did  any  member  of  the  committee 


97 


ever  “assume  to  limit  the  attendance  at  the  various  hearings 
that  were  held  to  those  only  whose  interests  were  friendly  to  the 
dye  manufacturer/’  Only  one  hearing  was  ever  arranged  for. 
On  August  26  the  shirt  manufacturers  appeared  before  the  rep¬ 
resentatives  of  the  War  Trade  Board  in  its  building  in  Washing¬ 
ton,  which  meeting  was  attended  by  the  committee.  No  shirt 
manufacturer  nor  other  individual  who  had  any  real  interest  in 
the  matters  which  were  to  be  discussed  at  that  meeting  was  denied 
admission.  The  only  persons  to  whom  admission  was  denied 
were  importers  or  representatives  of  importers,  whose  presence 
was  unnecessary  either  for  their  own  interests  or  for  that  of  the 
shirt  manufacturers,  and  they  were  excluded,  not  by  any  member 
of  the  committee,  but  by  a  representative  of  the  War  Trade 
Board. 

On  page  2,  paragraph  2,  of  the  memorandum,  the  following 
statement  appears :  “This  same  committee,  which  was  intended 
to  have  fair  representation  from  consumer  as  well  as  manufac¬ 
turer,  in  the  early  summer  of  1919,  submitted  a  report  to  the 
War  Trade  Board  Section,  upon  which  the  latter,  on  July  26, 
1919,  made  an  announcement  in  which  it  was  said : 

“  ‘As  the  result  of  a  careful  survey  of  the  present  situation  in 
the  dye-consuming  industries  and  the  unanimous  opinion  of  the 
Advisory  Committee  on  Dyes,  and  having  due  regard  to  all  exist¬ 
ing  conditions,  there  appears  to  be  no  such  need  for  German  dye¬ 
stuffs  in  the  United  States  as. to  warrant  the  issuance  of  licenses 
for  the  importation  of  any  of  these  articles.’ 

“This  brought  forth  violent  protests  from  consumers,  and  they 
made  it  clear  to  the  War  Trade  Board  Section  that  unless  they 
could  receive  a  quantity  of  German  dyes  to  meet  their  require¬ 
ments  they  would  be  put  to  unnecessary  hardships,  trouble  and 
expense,  and  would  be  at  a  disadvantage  with  foreign  textiles.” 

In  view  of  the  statement  in  the  memorandum  to  the  effect 
that  the  announcement  “brought  forth  violent  protests  from  con¬ 
sumers,”  the  statements  in  relation  to  War  Trade  Board  Ruling 
819  are  evidently  intended  to  imply  either  that  in  the  opinion  of 
the  committee  there  was  no  need  in  this  country  for  German  dyes 
or  that,  realizing  the  need,  the  committee  refused  to  admit  it, 
and  had  gone  on  record  for  saying  that  there  was  no  such  need. 
On  June  26  five  important  shirt  manufacturers  directed  a  letter 
to  the  War  Trade  Board  recommending  the  importation  of  cer¬ 
tain  quantities  of  vat  colors  to  satisfy  the  requirements  of  con¬ 
sumers.  On  June  16,  prior  to  the  receipt  of  the  letter,  the  War 
Trade  Board,  on  the  recommendation  of  its  committee,  had 
caused  a  questionnaire  to  be  directed  to  consumers  requesting 

98 


them  to  advise  of  the  extent  to  which  they  were  unable  to  obtain 
dyes  from  United  States  sources.  After  receipt  of  the  letter  from 
the  shirt  manufacturers,  an  additional  questionnaire  was  directed 
to  consumers  on  June  30.  Replies  to  these  questionnaires  would 
reflect  the  general  opinion  of  the  great  majority  of  consumers 
with  relation  to  the  need  for  German  dyes.  Of  the  four  thou¬ 
sand  consumers  to  whom  the  questionnaires  were  sent,  only  four 
per  cent  reported  that  they  were  in  need  of  German  dyes. 
Accordingly,  W.  T.  B.  R.  819  was  issued  July  26,  1919.  The 
policy  announced  therein  was,  therefore,  advocated  and  approved 
by  the  representatives  of  a  very  large  majority  of  the  dye-using 
industries.  t  Besides,  the  ruling  does  not  state  that  there  was  no 
need  whatsoever  for  German  dyes,  but  that  “there  was  no  such 
need  ...  as  to  warrant  the  issuance  of  licenses  for  the  impor¬ 
tation”  thereof.  The  purpose  of  the  statement  was  that,  even 
though  admittedly  German  dyestuffs  could  well  be  used  in  our 
domestic  industries,  those  German  dyestuffs  would,  under  the 
conditions  which  then  prevailed,  if  obtainable  at  all,  necessarily 
be  imported  through  the  old  German  Agencies,  who  were  using 
every  effort  to  regain  Germany’s  monopolistic  hold  on  the  dye¬ 
stuff  industries  of  this  country.  Such  efforts  on  the  part  of  an 
enemy  industry  could  not  be  tolerated.  It  was,  therefore,  felt 
that  the  disadvantages  of  importing  through  those  undesirable 
agencies  outweighed  any  needs  of  American  consumers,  as  mani¬ 
fested  at  that  time,  and,  therefore,  it  was  believed  best  to  await 
the  opportunity  afforded  by  the  reparation  clauses  of  the  Treaty 
of  Peace  and  thus  withhold  any  opportunity  for  the  old  German 
importing  agencies  to  reassert  destructive  domination  by  enemy 
interests  over  the  American  dyestuff  industries.  Besides,  licenses 
were  being  issued  freely  at  that  time,  as  they  are  being  issued  now, 
for  the  importation  of  dyes  from  Switzerland,  Great  Britain  and 
other  sources.  Accordingly,  it  was  felt  that  the  needs  of  con¬ 
sumers,  which  at  that  time  had  not  been  strongly  manifested, 
could  be  relieved,  in  substantial  measure,  by  importations  of  dyes 
of  non-enemy  origin. 

On  August  26  the  shirt  manufacturers  emphasized  to  the  com¬ 
mittee  and  to  the  War  Trade  Board  Section  the  need  for  the 
immediate  importation  of  vat  dyes  of  German  origin.  The  com¬ 
mittee  having  also  conducted  further  investigations  of  its  own 
and  having  discovered  that  importations  of  dyes  of  non-enemy 
origin  would  not  be  sufficient  to  satisfy  the  requirements  of  con¬ 
sumers  of  dyes,  and  having  reached  the  conclusion  that  dyes  under 
the  reparation  clauses  of  the  treaty  would  not  be  made  available 
except  after  considerable  delay,  recommended  to  the  War  Trade 


99 


Board  Section  the  issuance  of  licenses  authorizing  the  importa¬ 
tion  of  an  amount  of  vat  dyes  of  German  origin  sufficient  to 
satisfy  the  requirements  of  consumers  for  a  six  months’  period. 
On  October  i,  or  in  less  than  five  weeks  thereafter,  the  alloca¬ 
tion  was  made. 

On  page  4  of  the  memorandum  a  transscription  appears  of  a 
statement  alleged  to  have  been  made  in  the  Oil,  Paint  and  Drug 
Reporter  of  November  20,  1919  (page  27),  as  follows:  “Some 
of  the  consumers  say  that  when  they  came  here  or  sought  to  get 
the  facts  about  their  needs  before  the  government  officials,  they 
were  taken  in  charge  practically  by  representatives  of  one  of  the 
big  dye  manufacturers,  entertained  at  luncheon  and  otherwise, 
and  conducted  on  a  tour  of  inspection  through  the  company’s 
plant  near  here,  being  urged  to  patronize  home  industries.”  The 
committee  cannot  hold  itself  responsible  for  announcements  of 
the  press.  Insofar  as  the  above-quoted  press  statement  relates  to 
the  entertainment  which  was  alleged  to  have  been  accorded  by 
members  of  the  committee  to  consumers,  it  is  scurrilous  and  will 
be  accorded  no  further  consideration.  Insofar  as  it  relates  to 
the  fact  that  consumers  “were  taken  in  charge  practically  by  rep¬ 
resentatives  of  one  of  the  big  dye  manufacturers  and  conducted 
on  a  tour  of  inspection  through  the  company’s  plant  near  here, 
being  urged  to  patronize  home  industries,”  it  is  a  slanderous  dis¬ 
tortion  of  the  correct  inference  which  should  be  derived  from  the 
facts.  At  the  hearing  which  was  accorded  to  the  shirt  manu¬ 
facturers  on  August  26,  one  or  more  of  the  consumers  manifested 
considerable  interest  in  the  progress  of  the  domestic  industry  and 
requested  to  be  advised  of  the  extent  thereof ;  whereupon  the 
member  of  the  committee  to  whom  reference  is  made  in  the 
reprint  from  the  Oil,  Paint  and  Drug  Reporter  undertook  to  ex¬ 
plain  the  progress,  and  at  the  end  of  his  remarks  invited  any  of 
the  consumers  who  were  present  to  visit  the  plant  he  represented, 
which  was  conveniently  situated,  in  order  that  the  consumer 
might  have  an  opportunity  to  judge  for  themselves  of  the  progress 
of  the  industry.  The  fact  that  consumers  who  may  have  visited 
the  plant  in  question  (and  who,  by  the  way,  were  not  accom¬ 
panied  on  their  “tour  of  inspection”  by  any  member  of  the  com¬ 
mittee)  may  have  been  urged  “to  patronize  home  industries,” 
far  from  being  reprehensible,  was  praiseworthy,  as  was  admitted 
by  the  National  Association  of  Shirt  Manufacturers  in  the  fol¬ 
lowing  letter,  which  was  directed  by  them  to  the  War  Trade 
Board  Section  on  August  27,  the  day  after  the  Washington 
meeting : 


100 


V 

“The  National  Association 
“of 

“Shirt  Manufacturers 
“320  Broadway,  New  York,  N.  Y. 

“August  27,  1919. 

“Mr.  Lawrence  Bennett, 

“War  Trade  Board  Section, 

“Department  of  State, 

“Washington,  D.  C. 

“Dear  Sir: 

“In  behalf  of  the  National  Association  of  Shirt  Manufacturers, 
I  beg  to  thank  the  members  of  the  War  Trade  Board  Advisory 
Committee  and  Mr.  Garvan  as  well  as  yourself,  for  the  coopera¬ 
tion  given  us  yesterday  and  the  courtesies  extended  to  us. 

“We  feel  that  the  solution  of  the  difficulties  arrived  at  by 
your  Board  will  not  only  be  of  most  valuable  assistance  to  the 
shirt  industry  at  this  critical  time,  but  also  to  the  entire  textile 
industry  and  the  consuming  public. 

“Our  members  in  attendance  yesterday  surely  are  enthused  over 
the  progress  made  by  the  American  dye  manufacturers,  and  take 
this  opportunity  of  saying  that  we  shall  support  them  to  the  limit 
and  will  give  all  the  publicity  that  we  can  offer  to  the  consuming 
public  when  their  vat  colors  are  available. 

“Yours  very  truly, 

“Ralph  Hunter, 

“Chairman  Dyes  Committee.” 

Admittedly,  not  only  the  committee  itself,  but  the  War  Trade 
Board  Section  of  the  Department  of  State,  to  whom  the  com¬ 
mittee  is  responsible,  agreed  that  the  protection  of  the  industry, 
because  of  its  relation  to  the  important  problem  of  national  de¬ 
fense,  was  desirable  and  expedient. 

The  implication  contained  in  the  statement  that  consumers 
were  prevented  from  presenting  their  facts  to  government  offi¬ 
cials  is  vicious  falsification.  The  meeting  of  shirt  manufacturers 
of  August  26  was  presided  over  by  the  Chief  of  the  War  Trade 
Board  Section  of  the  Department  of  State. 

The  following  statement  appears  on  page  4  of  the  memoran¬ 
dum:  “Promise  was  made  to  the  consumers  at  this  meeting  (of 
shirt  manufacturers  on  August  26),  that  action  would  be  taken 
within  forty-eight  hours  to  furnish  them  with  six  months’  supply 
of  vat  dyes  of  German  origin,  and  which  the  American  manu¬ 
facturers  admitted  they  could  not  furnish.  The  consumers  heard 
nothing  further  until  the  appearance  of  a  circular  letter  dated 
October  1,  1919,  over  the  signature  of  the  Bureau  of  Imports.” 
The  committee  denies  that  it  undertook  at  that  meeting  to  furnish 


101 


consumers  with  dyes.  The  committee  promised  the  consumers 
that  they  would  recommend  the  removal  of  obstacles  to  the 
importation  of  vat  dyes  for  the  six  months’  period  by  recom¬ 
mending  the  issuance  of  the  necessary  import  licenses.  This 
recommendation  was  actually  made  by  the  committee  to  the  War 
Trade  Board  Sectio’n  immediately  after  the  meeting  of  August 
26,  and  on  August  30  the  War  Trade  Board  Section  of  the 
Department  of  State,  having  accepted  the  recommendation  of  the 
committee  circulated  a  questionnaire  among  consumers  of  vat 
dyes  requesting  to  be  advised  of  the  respective  requirements  of 
consumers  for  a  six  months’  period.  In  the  comparatively  short 
period  of  approximately  thirty  days,  and  notwithstanding  the 
administrative  and  technical  difficulties  involved  in  assembling  the 
necessary  information,  the  allocation  was  made  by  the  War  Trade 
Board  Section  on  October  the  first. 

The  President  of  the  Chemical  Foundation,  who  attended  the 
meeting,  may  have  promised  the  consumers  to  undertake  to  secure 
on  behalf  of  consumers  the  dyes  for  the  importation  of  which 
licenses  would  be  issued  by  the  War  Trade  Board  Section,  but 
neither  the  Advisory  Committee  nor  the  War  Trade  Board  Sec¬ 
tion  undertook  to  obtain  the  dyes  themselves.  The  War  Trade 
Board  Section  stated  that  it  would  make  every  effort  to  make 
available  to  consumers  a  portion  of  the  dyes  impounded  by  the 
Allies  and  Associated  Governments  under  the  Treaty  of  Peace 
with  Germany,  and  this  promise  on  the  part  of  the  War  Trade 
Board  Section  was  subsequently  discharged  to  the  fullest  extent. 

When  Dr.  Herty  sailed  for  Paris  on  September  3,  1919,  he 
did  so,  not  as  the  representative  of  the  War  Trade  Board  Section 
of  the  Department  of  State,  nor  of  its  Advisory  Committee,  but 
as  the  representative  of  the  President  of  the  Chemical  Founda¬ 
tion.  The  committee  is  informed  that  the  President  of  the 
Chemical  Foundation  contemplated  organizing  the  consumers 
before  Dr.  Herty  reached  Paris  in  order  that  consumers  might 
be  in  a  position  to  purchase  immediately  such  dyes  as  Dr.  Herty 
would  be  able  to  secure  from  the  German  manufacturers  and  to 
the  extent  to  which  the  same  might  be  licensed  by  the  War  Trade 
Board  Section  of  the  Department  of  State.  Before  Dr.  Herty 
reached  Paris  the  Chemical  Foundation  advised  the  War  Trade 
Board  Section  of  the  Department  of  State  and  its  Advisory  Com¬ 
mittee  that  an  organiation  of  consumers  was  impossible.  It  was 
then  that  Dr.  Herty  was  appointed  as  a  representative  of  the 
War  Trade  Board  Section.  The  War  Trade  Board  Section  of 
the  Department  of  State  advised  its  committee  that  the  attempt 
of  the  Chemical  Foundation  to  organize  the  consumers  having 
failed  and  Dr.  Herty’s  status  having  been  changed  from  that  of 


102 


representative  of  the  Chemical  Foundation  to  that  of  a  represen¬ 
tative  of  the  War  Trade  Board  Section,  there  was  no  way  in 
which,  under  its  powers  and  consistently  with  its  policies,  the 
dyes  negotiated  for  by  Dr.  Herty  could  be  restricted  to  one  chan¬ 
nel  of  importation.  The  War  Trade  Board  Section  has  author¬ 
ized  the  committee  to  state  that  the  procedure  which  has  been 
established  for  the  importation  of  reparation  dyes  and  dyes  from 
the  German  Cartel  was  decided  upon  by  the  War  Trade  Board 
Section,  and  that  the  recommendations  of  its  committee  in  that 
connection,  although  given  consideration,  were  not  in  every  in¬ 
stance  accepted.  In  this  connetion,  the  committee  points  out  that 
Dr.  Hefty  having  sailed  for  Paris  on  September  3,  arrived  in 
Paris  on  September  14,  and  that  the  negotiations  with  the  Ger¬ 
man  government  for  reparation  dyes  and  Cartel  dyes  were  con¬ 
cluded  on  October  4. 

On  page  11  of  the  memorandum,  the  following  statement  ap¬ 
pears  :  “There  is  a  general  feeling  of  dissatisfaction  among  con¬ 
sumers,  which  is  due  in  no  small  measure  to  the  impression 
created  by  a  chain  of  circumstances,  that  the  so-called  Dye  Ad¬ 
visory  Committee,  in  conjunction  with  Dr.  Herty,  have  not  acted 
openly  and  frankly  toward  the  public,  and  that  the  official  author¬ 
ity  and  power  given  them  has  been  availed  of  to  benefit  private 
interests.”  The  committee  denies  that  it  has  not  acted  openly 
and  frankly  toward  the  public  to  the  fullest  extent  to  which  its 
oath  of  office  authorized  it  to  reveal  to  the  public  the  information 
in  its  possession.  The  reiterated  statement  that  the  authority  and 
power  given  to  the  committee  has  been  availed  of  to  benefit  in¬ 
dividual  private  interests,  as  contradistinguished  from  the  inter¬ 
ests  of  the  industry  and  of  consumers  as  a  whole,  is  a  lie,  as  is 
evidenced  by  the  fact  that  any  such  attempt,  the  existence  of 
which  is  denied,  would  have  been  promptly  frustrated  and  penal¬ 
ized  by  the  War  Trade  Board  Section,  with  whom  the  ultima 
to  decision  has  rested  in  every  case. 

If  the  statement  that  a  “general  feeling  of  dissatisfaction 
(exists)  among  the  consumers”  is  true,  why  is  it  that  the  memo¬ 
randum  has  been  signed  by  only  eleven  consumers?  The  reason 
is  obvious.  The  Advisory  Committee  on  Dyes  of  the  War  Trade 
Board  Section  of  the  Department  of  State  has  good  reason  to 
believe  that  the  memorandum  of  December  1,  was  circulated,  if 
not  prepared,  by  one  of  the  most  important  of  the  agencies  of 
the  German  dye  manufacturers.  The  committee  knows  definitely 
that  at  least  one  of  the  signatures  inscribed  on  it  was  obtained  by 
misrepresentation  on  the  part  of  the  agency  referred  to,  and  the 
proof  of  the  latter  statement  will  be  found  in  the  reply  of  the 

103 


Textile  Alliance  to  the  memorandum  of  December  i,  which  reply 
is  attached  hereto. 

I  would  like  to  say  that  I  have  here  this  statement  in  writing, 
to  which  is  appended:  “The  War  Trade  Board  Section  of  the 
Department  of  State  has  read  this  communication,  which  it 
approves : 

Henry  B.  Thompson, 

Franklin  W.  Hobbs, 

Frank  D.  Cheney, 

August  Metz, 

Chas.  H.  Herty. 

Senator  Watson.  What  are  your  mills? 

Mr.  Thompson.  The  United  States  Finishing  Company.  It 
is  a  Connecticut  Corporation.  We  have  one  print  work  at  Nor¬ 
wich,  another  at  Sterling,  and  one  at  Longville,  Rhode  Island, 
and  another  at  Pawtucket,  and  another  at  Providence.  We  have 
an  output  of  about  300,000,000  yards  of  cotton  goods  a  year. 
While  we  have  suffered  inconvenience  we  have  never  met  the 
peculiar  conditions  I  have  heard  stated  by  some  of  the  wit¬ 
nesses  here  this  afternoon.  For  instance,  I  heard  one  gentle¬ 
man  express  inability  to  get  phosphine,  and  that  has  injured  his 
work,  and  that  he  could  only  get  it  at  six  dollars  a  pound.  On 
the  other  hand,  we  have  been  purchasing  it  for  a  dollar  and  forty 
cents  a  pound. 

Senator  Nugent.  Manufactured  in  this  country? 

Mr.  Thompson.  Yes,  sir. 

In  the  same  way  it  was  a  surprise  to  hear  another  man  say 
he  could  not  get  methlene  blue  and  malachite  green.  They  have 
been  manufactured  in  large  quantities  by  half  a  dozen  manufac¬ 
turers  in  this  country.  The  objection  of  many  of  these  manu¬ 
facturers  is  that  this  will  gradually  reduce  prices  on  these  dye¬ 
stuffs  ;  but  the  argument  that  business  will  be  injured  by  their 
inability  to  get  certain  dyestuffs  that  are  not  manufactured  seems 
to  me  untenable,  for  under  the  wording  of  the  Act,  action  on  that 
matter  seems  to  be  automatic  in  such  cases  because  it  says  the 
commission  shall  issue  a  license  to  the  applicant  if  he  cannot 
secure  that  article  in  this  country;  it  is  obligatory.  So  he  can 
get  it,  as  a  matter  of  fact. 

Senator  Curtis.  Anything  else  you  wish  to  say? 

Mr.  Thompson.  I  believe  not. 

Senator  Watson.  Suppose  he  were  to  say  it  was  an  inferior 
article,  cosine,  for  instance.  Suppose  a  man  were  to  say:  “I  can 
get  it.  but  it  is  not  of  good  quality.  I  have  tested  it  and  it  will 
not  work.”  How  about  a  case  of  that  kind? 

Mr.  Thompson.  That  is  a  question  of  fact. 


104 


Senator  Watson.  Of  course  it  is. 

Mr.  Thompson.  Which  would  be  determined  by  experts  in 
the  department. 

Senator  Watson.  But,  after  all,  the  power  would  rest  with 
the  board  to  either  grant  or  not  grant  a  license  ? 

Mr.  Thompson.  Yes ;  it  would.  But  of  course  I  want  to  say 
that  as  far  as  our  board  goes,  and  I  would  like  to  state  this  very 
emphatically,  that  I  saw  no  attempt  on  the  part  of  the  members 
of  that  board,  who  are  producers  and  manufacturers  of  dyestuffs, 
to  play  dog  in  the  manger.  In  every  instance  they  have  said  to 
us,  if  we  cannot  make  this  stuff,  issue  the  license.  They  have 
shown  a  good  spirit.  I  think  they  all  realize  that  we  have  got  to 
foster  the  American  trade,  and  their  own  customers  have  got  to 
be  kept  in  business,  so  that  it  would  be  foolish  to  exclude  dye¬ 
stuffs  not  manufactured  in  this  country.  I  see  no  attempt  on 
the  part  of  manufacturers  of  dyestuffs  to  pursue  any  such  course, 
course. 

Senator  Curtis.  Is  that  all? 

Mr.  Thompson.  I  believe  that  is  all. 

Mr.  Demming.  Colonel  Wood  has  left  the  city.  I  would  like 
to  ask  the  privilege  for  Colonel  Wood  to  reply  to  Mr.  Thompson’s 
statement. 

Senator  Curtis.  He  may  reply  in  writing.  The  committee 
will  not  have  an  opportunity  to  wait  for  him  to  appear  in  person. 

Mr.  Choate.  Mr.  Chairman,  the  president  of  the  Textile  Alli¬ 
ance  informs  me  he  would  like  to  put  in  a  statement. 


105 


STATEMENT  OF  THE  TEXTILE  ALLIANCE 

Mr.  Price.  My  name  is  B.  R.  Price,  secretary  of  the  Textile 
Alliance.  I  most  respectfully  desire  to  file  a  written  brief  in  con¬ 
nection  with  this  hearing.  This  has  been  necessary  as  a  result 
of  some  of  the  changes  made  in  the  program  of  the  hearing. 

Textile  Alliance,  Inc. 

45  East  17th  Street 
New  York  City 

Washington,  D.  C.,  December  13th,  1919. 
Finance  Committee  of  the  Senate, 

Washington,  D.  C. 

Gentlemen  : 

Eleven  manufacturers  have  circulated  a  “Memorandum  in 
Opposition  to  the  Purchase  by  the  Government  Through  the 
Textile  Alliance  or  other  Official  Agency,  of  Dyes  Directly  from 
the  Foreign  Manufacturers,”  dated  December  1,  1919. 

In  this  memorandum  certain  statements  are  made  with  refer¬ 
ence  to  the  Textile  Alliance,  Inc.,  to  which  the  Textile  Alliance, 
Inc.,  feels  it  necessary  to  reply,  as  they  are  almost,  without  ex¬ 
ception,  false  and  the  entire  tendency  of  the  reference  to  the 
Alliance  is  misleading.  In  addition  to  the  above,  several  remarks 
appear  in  the  record  of  the  hearings  before  the  Finance  Com¬ 
mittee  of  the  Senate  in  relation  to  the  Longworth  bill,  8078. 
which  betray  a  misunderstanding  on  the  part  of  Colonel  John  P. 
Wood,  the  Honorable  Herman  A.  Metz,  Mr.  T.  A.  Harris,  and 
others,  in  relation  to  the  function  and  past  actions  of  the  Alliance. 
With  all  possible  respect  for  these  gentlemen  and  entire  con¬ 
fidence  in  their  good  faith,  we  beg  leave  to  correct  the  record. 

Before  doing  so,  we  wish  to  make  known  to  the  committee  that 
the  Textile  Alliance  in  its  relations  with  the  War  Trade  Board,  is 
acting  as  a  purely  administrative  agency  and  that  it  takes  no  part 
in  the  discussion  before  the  board  as  to  the  merits  or  demerits  of 
a  licensing  system  for  dyes  or  any  other  commodity.  It  is  prac¬ 
tically  a  purchasing,  shipping,  collecting  and  distributing  agency 
for  the  War  Trade  Board  Section  of  the  State  Department,  thus 
performing  functions  which  a  Government  department  is  unable 
to  do  for  itself  and  which  the  Textile  Alliance  already,  during 
the  war,  undertook  and  carried  out  on  behalf  of  the  War  Trade 
Board  and  Quartermaster-General  in  relation  to  such  necessary 
commodities  as  Russian  flax  and  Iceland  wool  and  skins.  These 

106 


transactions  amounted  to  (we  are  unable  to  refer  at  Washington 
to  the  exact  figure)  about  five  million  dollars,  and  it  was,  there¬ 
fore,  natural  that  in  relation  to  dyes  the  War  Trade  Board 
should  again  turn  to  the  Textile  Alliance. 

On  September  9,  1919,  Mr.  Henry  B.  Thompson,  a  large  manu¬ 
facturer  of  cotton  goods,  chairman  of  the  advisory  committee  on 
dyes  to  the  War  Trade  Board,  addressed  to  the  Textile  Alliance, 
Inc.,  a  letter  in  part  as  follows: 

“The  functions  of  the  War  Trade  Board  Section  will,  of 
course,  continue  only  until  the  ratification  of  the  peace  treaty,  but 
the  intention  is  to  bring  about  immediate  importation  of  a  few 
months'  supply  of  dyestufifs  which  are  particularly  needed,  and 
which  are  not  now  obtainable  from  domestic  sources.  The  com¬ 
mittee's  view  is  that  your  organization  is  quite  the  most  suitable 
for  the  purpose  of  bringing  those  dyestufifs  into  the  United 
States,  and  appropriately  distributing  them  to  bona  fide  Ameri¬ 
can  consumers,  upon  the  order  of  such  consumer;  that  both  the 
importation  and  distribution  can  be  handled  much  as  your  or¬ 
ganization  handled  imports  during  the  war. 

“With  that  end  in  view,  the  subject,  of  course,  to  the  approval 
of  the  War  Trade  Board  Section  of  the  State  Department,  this 
letter  is  written  on  behalf  of  the  committee  to  ask  whether  or 
not  it  is  feasible  for  you  to  undertake  the  entire  control  and 
disposition  of  such  importation,  as  you  did  the  various  articles 
which  were  brought  in  by  you  during  the  war." 

Following  this  letter,  on  September  29,  October  10,  and  No¬ 
vember  17,  the  Textile  Alliance,  Inc.,  entered  into  a  formal  ar¬ 
rangement  with  and  at  the  request  of  the  State  Department,  “To 
permit  the  importation  (from  official  sources,  Textile  Alliance, 
Inc.),  of  vat  dyes  from  Germany  in  quantities  sufficient  to  supply 
the  requirements  of  the  consumers  in  the  United  States  for  the 
six  months’  period,  October  1,  1919,  to  April  1,  1920,"  which 
subsequently  was  extended  to  include  non- vat  dyes  of  German 
origin  in  the  same  manner,  the  function  of  the  Textile  Alliance, 
Inc.,  being  to  “act  as  an  intermediary  between  the  consumers 
of  dyes  in  the  United  States  and  the  allied  authorities  from  or 
through  whom  the  dyes  are  to  be  secured."  It  was  required  that 
the  Alliance  should  charge  a  commission  sufficient  to  defray  all 
expenses  incurred  and  that  the  overplus  remaining  after  payment 
of  all  expenses  should  be  distributed  pro  rata  among  those  by 
whom  such  commissions  should  be  paid. 

It  may  here  be  stated  that  prior  to  the  commencement  of  its 
operations,  the  Textile  Alliance  sought  the  opinion  of  its 
counsel  as  to  whether  the  proposed  arrangement  involved  any 
restraint  of  trade  as  to  which  the  Textile  Alliance  might  be 


107 


criticized  or  injured.  Having  before  him  the  instruction  to  the 
department  given  prior  to  the  charge  raised  in  the  hearings  be¬ 
fore  the  Finance  Committee,  that  the  purpose  of  the  advisory 
committee  and  of  the  War  Trade  Board  was  to  drive  out  of 
business  importers  of  dyes,  American  citizens,  the  Textile  Alli¬ 
ance  was  informed  that  it  was  entirely  proper  for  the  Alliance 
to  proceed.  Referring  back  to  correspondence  of  this  date,  we 
find  the  following  in  letters  from  the  War  Trade  Board  to  the 
State  Department : 

October  13.  “Unless  the  Grasselli  Chemical  Company  and  the 
Chemical  Foundation,  Inc.,  will  give  to  the  Department  of  State 
assurances  that  the  Textile  Alliance,  Inc.,  will  receive  at  their 
hands  as  patent  owners  no  greater  privileges  than  will  be  ac¬ 
corded  by  them  to  any  other  American  importer,  I  feel  we  will 
have  to  abandon  the  plan  to  which  you  have  been  kind  enough 
to  lend  your  support.” 

On  October  25,  the  department  advised  the  Alliance  that  the 
assurances  had  been  given  and  in  the  same  letter  proceeded  at 
length  to  instruct  the  Alliance  that 

“The  department  will  interpose  no  objection  to  such  importa¬ 
tion  by  the  importers  (the  reference  was  to  reparation  dyes)  pro¬ 
vided  that  the  importation  is  effected  through  the  Alliance 
*  *  *  for  the  ultimate  benefit  of  the  consumers,  the  right 
to  be  reserved  to  the  importers  to  sell  their  dyes  *  *  *  to 
their  customers  at  any  price.” 

In  this  single  instance  it  was  provided,  on  account  of  the 
small  quantity,  consumers  importing  directly  should  receive  a 
preference  over  importers,  but  in  relation  to  the  larger  quantity 
covered  by  the  Cartel  offer,  the  department’s  instructions  in  the 
same  letter  were  “in  filling  orders  from  that  source  the  Textile 
Alliance  will  treat  all  consumers  alike.”  Again,  in  the  same 
letter,  “the  opportunity  for  discrimination  has  been  eradicated, 
dyes  will  be  immediately  available  for  consumers,  and  the  rights 
of  private  importers  have  been  reserved.” 

There  are  two  sources  of  supply  from  which  dyes  are  obtain¬ 
able  by  consumers  through  the  Textile  Alliance,  Inc.  The  first 
source  is  that  arranged  for  with  the  German  delegation  at  Ver¬ 
sailles  on  October  4.  These  dyes  were  referred  to  as  the  “repara¬ 
tion  dyes.”  A  statement  follows  of  the  quantities  available  now 
and  in  the  future  : 

Reparation  Dyes 

(a)  Where  reference  is  made  in  these  notes  to  reparation 
dyes,  it  is  understood  to  mean  those  dyes  that  are  available  to 
the  United  States  from  reparation  stocks  as  per  inventories  of 

108 


August  15,  1919,  rendered  by  the  Germans  and  certified  by  them 
to  be  complete  and  correct. 

( b )  These  dyes  have,  thus  far,  been  only  partically  appor¬ 
tioned  between  the  countries  entitled  to  receive  them.  Of  this 
partial  apportionment  the  United  States’  share  is  1,500  tons,  all  or 
any  part -of  which  the  United  States  is  free  to  accept  at  any 
time  without  being  committed  in  any  way  to  take  any  portion  not 
wanted. 

Note  i.  The  total  stocks  of  dyes  in  German  factories  on 
August  15,  1919,  is  roughly  estimated  at  40,000  tons,  of  which 
one-half,  say  20,000  tons,  will  be  available  to  the  allied  and 
associated  powers.  Of  these  20,000  tons,  only  5,200  tons  have 
thus  far  been  apportioned  as  follows : 

1,500  tons 
1,500  tons 

2.200  tons 

Total  .  5.200  tons 

The  above  apportionment  merely  indicates  aggregate  metric 
tons  and  does  not  represent  the  proportion  of  each  individual 
dye  that  each  country  is  to  receive.  The  proportion  of  each  dye 
that  each  country  is  to  receive  out  of  the  quantity  available  to 
the  allied  and  associated  powers  has  thus  far  been  fixed  as  fol¬ 
lows  : 


United  States. 
Great  Britain. 
France 
Italy 
Belgium 


United  States 
Great  Britain, 

France  . 

Italy  . 

Belgium  . 


20.44  per  cent 
20.44  Per  cent 
15.  per  cent 
10.  per  cent 
5.  per  cent 


Total  . .  70.88  per  cent 

This  leaves  29.12  per  cent  to  be  divided  among  the  allied  and 
associated  powers  when  peace  comes  into  force.  How  this  29.12 
per  cent  may  be  divided  cannot  now  be  stated.  When  peace 
comes  into  force  there  will  remain  say  14,800  tons  to  be  appor¬ 
tioned  between  the  allied  and  associated  powers,  being  the  dif¬ 
ference  between  5,200  tons  already  apportioned,  and  the  total  of 
20,000  tons.  Whether  or  not  the  United  States  will  accept  an 
apportionment  either  of  the  29.12  per  cent,  or  of  the  14,000  tons, 
is  not  yet  ascertainable. 

The  second  source  is  the  German  manufacturers  themselves, 
who  voluntarily,  also  on  October  4,  gave  to  the  representative  of 
this  Government,  Dr.  Charles  H.  Herty,  an  option  covering  vat 
colors  and  other  colors,  which  the  State  Department  subsequently 

109 


agreed  could  be  accepted  by  the  Textile  Alliance,  Inc.,  in  its 
official  capacity.  The  Textile  Alliance,  Inc.,  on  the  14th  of  No¬ 
vember,  subsequently  accepted  the  offer  through  the  intermedia¬ 
tion  of  the  State  Department.  This  is  hereafter  referred  to  as 
the  Cartel  option.  Its  importance  lies  in  the  fact  that  the 
quantity  of  dyes  immediately  obtainable  through  the  reparation 
source,  is  relatively  small  and  it  was  the  intent  and  desire  of  the 
State  Department  and  of  the  advisory  committee  thus  to  provide 
the  difference  between  the  available  supply  from  the  reparation 
commission  and  the  American  consumers’  requirements,  for  the 
six  months’  period  to  which  the  present  arrangement  between 
the  Alliance  and  the  State  Department  applies,  at  prices  which 
appear  to  be  reasonable  and  with  a  promptitude  which  the  offer 
of  the  German  manufacturers  seemed  to  assure. 

The  Alliance’s  instructions  with  reference  to  the  distribution  of 
these  colors  have  already  been  given,  but  attention  is  again 
called  to  the  fact  that  in  this  respect  the  Alliance  has  no  dis¬ 
cretion.  It  must  make  a  distribution  among  the  applicants  in  pro¬ 
portion  to  the  quantities  shown  by  their  allocation  certification. 

The  three  principal  objections  raised  before  the  committee  to 
the  procedure  of  the  Alliance  were  as  follows:  The  first  objec¬ 
tion  was  the  Textile  Alliance  cannot  fix  a  definite  price  for  the 
dyes  to  be  imported  through  it.  The  reason  for  this  is  that 
while  the  price  to  be  paid  to  the  Reparation  Commission  is  known 
in  marks,  the  rate  of  exchange  is  not  and  cannot  be  fixed.  It  has 
declined  from  about  five  cents,  when  the  negotiations  began,  to 
the  present  level  of  about  a  cent  and  three-quarters.  The  pay¬ 
ment  will  be  made  at  the  rate  of  exchange  prevailing  on  the  date 
that  the  dyes  are  delivered.  In  addition  to  this,  while  the  insur¬ 
ance  and  freight  may  be  calculated  within  reasonable  limits,  they 
cannot  be  contracted  for  exactly,  nor  can  the  Alliance  tell  how 
long  the  present  arrangements  will  last  or  what  its  operating  ex¬ 
penses  will  be.  Obviously,  the  ratio  of  expenses  to  the  business 
done  will  be  largely  affected  by  the  amount  of  business  passing 
through  its  hands,  which  it  is  likewise  unable  to  estimate.  Since 
the  Alliance  is  operating  at  cost,  and  has  agreed  to  return  the 
unexpended  balance  of  commissions,  if  any,  to  those  who  have 
paid  them,  it  is  not  in  a  position,  as  a  dealer  would  be,  to  add 
a  lump  sum  more  than  expenses  to  cover  all  possible  risks,  and 
pocket  the  saving  as  its  profit. 

The  most  uncertain  factor  in  the  cost  of  the  reparation  dyes 
is  the  duty.  It  had  been  hoped  that  in  view  of  their  official 
source  and  method  of  importation,  they  could  be  entered  at  cost. 


no 


A  rule  received  from  the  Treasury  Department  on  December  12, 
states : 

“The  President’s  proclamation  under  which  collectors  are 
required  to  accept  invoices  and  estimated  duties  based  upon  the 
consular  certificates  of  depreciation  attached  to  the  invoice,  has 
no  relation  to  the  question  of  the  foreign  market  value  of  the 
merchandise.  It  merely  determines  what  is  the  entered  value. 
Duty,  however,  is  not  assessed  upon  the  entered  value  if  the 
appraised  value  is  higher.  It  might  well  be  that,  in  the  case  of 
an  importation  shown  by  the  consular  certificate  attached  to  the 
invoice  to  be  paid  in  depreciated  currency,  the  appraiser,  in 
finding  the  value,  would  return  a  value  very  much  in  excess  of 
the  value  stated  in  the  invoice.  *  *  *  Furthermore,  the 

department  has  issued  no  instructions  to  collectors  as  to  the 
foreign  market  value  of  the  merchandise.” 

It  is  obviously  impossible  for  the  Textile  Alliance  to  estimate 
the  cost  of  reparation  dyes  under  these  conditions  of  uncertainty, 
for,  assuming  the  entered  value  to  be  $35,000.00,  the  appraised 
value  may  well  be  $4,000,000.00,  and  instead  of  paying  duties  of 
approximately  $10,000.00,  the  collector  may  demand  $120,000.00. 
Within  narrower  limits,  this  difficulty  may  also  apply  to  the 
colors  obtained  from  the  Cartel  ofifer. 

The  second  objection  raised  at  the  hearings  relates  to  pay¬ 
ment  required  in  advance  for  vat  dyes.  The  German  manu¬ 
facturers  refused  to  extend  credits,  as  I  am  informed  by  Mr. 
Herman  A.  Metz,  even  to  their  own  agents  in  this  country.  The 
Alliance  had  every  reason  to  expect  prompt  shipment  particularly 
of  the  reparation  colors,  as  it  had  provided  that  they  should  be 
shipped  in  bulk.  It  considered  arranging  with  bankers  for  such 
credit  as  would  enable  it  to  give  consumers  some  time  for  pay¬ 
ment,  if  not  the  usual  dealers’  terms.  The  difficulties  were  too 
great,  and  as  the  Alliance  is  acting  purely  as  the  agent  of  the 
American  interests  concerned,  it  felt  that  they  should  finance 
each  his  own  importation.  In  the  case  of  non-vat  colors  there 
has  been  no  such  reason  for  haste  or  to  expect  such  prompt  ship¬ 
ments,  and  arrangements  were  therefore  made  that  banker’s 
credits  promptly  available  might  be  substituted  for  cash  at  the 
convenience  of  each  consumer.  It  is  probable  that  the  com¬ 
mittee,  and  certain  that  the  officers  of  the  Alliance  will  desire  to 
follow  this  course  with  all  importations  in  the  future. 

Complaint  was  also  made  of  unnecessary  delays  in  the  work 
of  the  Textile  Alliance  and  of  the  War  Trade  Board  Section. 
We  can  deal  only  with  the  former  and  respectfully  submit  that  in 
this  matter  consumers  are  themselves  largely  to  blame  and  that 
the  rest  of  the  blame  rests  upon  the  shoulders  of  Messrs.  Kutt- 


iii 


roff,  Pickhardt  and  Company,  whose  representative,  Mr.  Paul 
Pickhardt,  today  appeared  before  the  committee.  Many  of  the 
descriptions  submitted  to  the  Alliance  are  incomplete  or  fail  to 
state  that  if  the  dye  is  not  available  in  paste  form,  it  may  be  used 
as  a  powder.  Many  documents  are  incomplete  as  to  signature 
or  in  execution,  or  require  amendment  as  the  consumer  forwards 
successive  additions  to  his  list.  Messrs.  Kuttrofif,  Pickhardt  & 
Co.,  are  also  largely  responsible  for  the  delay,  as  the  following 
statement  will  show.  On  October  ioth,  the  State  Department 
sent  to  all  holders  of  vat  dyes  certificates  issued  up  to  that  date 
a  notice  of  the  appointment  of  the  Textile  Alliance,  Inc.,  as  its 
exclusive  representative  in  connection  with  Reparation  dyes.  On 
October  28th,  the  Textile  Alliance  notified  the  trade  of  its  ar¬ 
rangements  .  In  the  meantime,  holders  of  certificates  had  largely 
assigned  them  to  Messrs.  Kuttrofif,  Pickhardt  &  Company, 
and  to  Messrs.  Herman  A.  Metz  and  Company,  who  on 
account  of  the  low  price  obtainable  through  the  War  Trade 
Board  Section,  considered  it  advisable  in  the  interest  of  their  cus¬ 
tomers  that  their  certificates  should  be  assigned  to  the  Textile 
Alliance.  On  the  5th  of  November,  representatives  of  both  firms 
were  requested  to  assign  them  directly  to  the  Textile  Alliance. 
Mr.  Metz  did  so,  and  at  all  times  since  has  lent  his  cordial  co¬ 
operation.  Messrs.  Kuttrofif,  Pickhardt  and  Co.,  returned  the 
licenses  to  the  holders  of  the  allocation  certificates.  This  neces¬ 
sitated  that  they  should  again  be  returned  to  Messrs.  Kuttrofif, 
Pickhardt  and  Co.,  for  cancellation,  before  the  War  Trade  Board 
would  issue  new  licenses  in  favor  of  the  Textile  Alliance.  This 
was  the  first  of  a  series  of  steps  on  the  part  of  this  firm,  the  efifect 
of  which  was  to  cause  doubt,  uncertainty  and  delay  in  the  rela¬ 
tions  between  the  Textile  Alliance  and  the  trade.  Thus,  on  No¬ 
vember  19,  the  counsel  of  Messrs.  Kuttrofif,  Pickhardt  and  Co., 
called  upon  the  Textile  Alliance  for  the  purpose  of  suggesting 
that  the  Alliance  should  make  use  of  vat  dye  licenses  assigned 
to  it  only  for  the  purpose  of  securing  the  available  reparation 
dyes,  and  that  the  unissued  portions  should  be  returned  to  the 
consumers  in  order  that  the  German  importers  might  import  the 
remainder  through  their  regular  channels'.  In  consideration,  he 
offered  that  if  Messrs.  Kuttrofif,  Pickhardt  and  Co.’s  colors 
should  arrive  before  those  of  the  Textile  Alliance  coming  from 
the  Badische  Anilin  and  Soda-Fabrik,  to  hold  the  Textile  Alli¬ 
ance  harmless  from  losses  in  case  such  dyes  should  be  found 
to  be  in  excess  of  consumers’  requirements.  Their  representa¬ 
tive  said  that  he  understood  that  thirty  per  cent  of  American 
requirements  would  be  satisfied  from  the  raparation  source,  and 
the  remainder  from  the  Cartel  offer.  He  recommended  that  the 


1 12 


Cartel  offer  be  allowed  to  lapse,  as  it  was  his  opinion  that  the 
deficit  in  consumers’  requirements  should  be  made  up  through 
the  usual  commercial  importing  channels.  Nevertheless,  on  the 
22d  of  November,  Messrs.  Kuttroff,  Pickhardt  and  Co.  issued  a 
circular  in  which  they  cast  doubt  upon  the  existence  of  any  such 
option  as  their  representative  had  discussed  with  the  Alliance, 
and  specifically  stated  that  it  did  not  apply  to  indanthrene  colors. 
So  the  Alliance  was  obliged  to  reply  on  December  2,  and  Messrs. 
Kuttroff,  Pickhardt  and  Co.  have  apparently  continued  their 
argument,  although  not  in  their  own  name,  through  the  circula¬ 
tion  of  the  memorandum  referred  to  at  the  head  of  this  letter, 
signed  by  eleven  textile  manufacturers,  whose  signatures  at 
least  in  the  case  of  one  manufacturer  who  has  repudiated  the 
document  on  the  ground  that  it  was  obtained  by  misrepresenta¬ 
tion,  were  obtained  by  the  representatives  of  Messrs.  Kuttroff, 
Pickhardt  and  Co.  This  circular  has  been  placed  before  the 
committee  by  Mr.  Henry  B.  Thompson,  who  testified  today. 

With  this  introduction  we  may  now  deal  with  the  statement 
of  the  circular. 

On  page  No.  5,  it  is  stated  that  Dr.  Herty  was  sent  abroad  in 
October  to  complete  arrangements  between  the  Textile  Alliance, 
Inc.,  and  the  Reparation  Commission.  This  is  untrue. 

On  page  No.  6,  it  is  stated  that  if  the  negotiations  should  be 
consummated  the  Textile  Alliance,  Inc.,  would  be  in  a  position 
with  which  no  individual  private  concern  could  compete.  This 
is  true  only  so  far  as  relates  to  the  dyes  obtained  from  the  repara¬ 
tion  source,  as  to  which  there  appears  to  be  no  complaint.  There 
is  nothing  known  to  the  Alliance  to  prevent  American  importers 
from  obtaining  dyes  direct  from  the  Cartel,  or  from  other  manu¬ 
facturers  or  markets  of  the  world  upon  allocation  certificates 
which  may  be  assigned  to  them,  at  the  price  which  they  can 
persuade  the  makers  to  sell  for. 

On  page  No.  6,  it  is  stated  that  the  result  of  the  negotiations 
would  compel  consumers  to  effect  their  importations  exclusively 
through  the  designated  official  agency.  However,  importers  may 
buy  from  the  official  source,  as  has  just  been  shown,  and  it  is 
obvious  that  consumers  may  likewise  buy  and  import  through 
any  channel  that  they  see  fit.  There  is  certainly  nothing  in  any 
requirement  of  the  State  Department,  nor  in  the  attitude  of  the 
State  Department  as  exhibited  during  two  months  of  constant 
negotiations  to  justify  this  charge.  The  State  Department  has 
shown  every  evidence  of  a  desire  not  to  create  an  exclusive 
monopoly,  excepting  in  so  far  as  the  dyes  obtainable  from  the 
reparation  source  may  be  considered  such  a  monopoly. 

Nor  is  it  true  that  the  Textile  Alliance,  Inc.,  by  averaging  the 

113 

I 


prices  of  reparation  dyes  with  Cartel  dyes,  can  supply  the 
private  consumer  at  prices  lower  than  a  private  concern,  meaning 
presumably  an  importing  dealer,  purchasing  directly  from  the 
manufacturer.  For  either  the  consumer  or  importer  may  estab¬ 
lish  his  own  average  by  buying  the  cheap  reparation  dyes  through 
the  Alliance  and  making  use  of  his  license  to  buy  the  remainder 
of  his  requirements  elsewhere.  And  many  have  already  indicated 
their  intent  to  do  this  with  the  entire  approval  of  everyone  con¬ 
cerned. 

This  being  so,  the  statements  made  on  page  No.  7  are  obviously 
without  force.  There  is  nothing,  for  instance,  to  prevent  im¬ 
porters  who  have  established  credits  abroad  and  have  incurred 
other  heavy  expenses  from  making  use  of  such  credits,  or  of 
export  licenses  from  the  proper  authorities  abroad  which  may 
have  been  issued  upon  the  faith  of  import  licenses  issued  in  the 
United  States. 

On  page  No.  8,  it  is  stated  that  importers  are  influenced  in 
seeking  to  obtain  supplies  of  the  reparation  dyes,  by  a  rumor 
current  among  consumers  that  the  Textile  Alliance,  Inc.,  would 
undertake  to  procure  for  any  consumer  all  of  his  allotment  of 
dyes  or  none  at  all,  in  other  words,  that  the  Textile  Alliance,  Inc., 
would  preclude  any  importer  from  obtaining  any  proportion  of 
the  dyes  from  the  reparation  commission  unless  the  consumer 
would  empower  the  Textile  Alliance,  Inc.,  by  assignment  of  his 
license  to  it  to  procure  his  full  allotment.  We  are  constrained 
to  believe  that  if  any  such  rumor  was  current  among  consumers, 
it  was  started  as  propaganda.  No  such  rumors  returned  to  the 
Textile  Alliance,  nor  were  there  inquiries  addressed  to  the  Alli¬ 
ance  by  consumers  which  would  indicate,  the  existenc  of  such  a 
rumor.  Furthermore,  had  there  been  such  a  rumor,  importers 
might  readily  have  satisfied  themselves  as  to  its  baselessness. 
Certainly  Messrs.  Pickhardt  and  Nathan  might  have  done  so 
in  their  conversations  with  the  officers  of  the  Alliance  on  Novem¬ 
ber  10  and  19. 

The  eleven  signatories  of  the  memorandum  might  also  have 
satisfied  themselves  had  they  desired  to  do  so.  As  a  matter  of 
fact  three  of  them,  in  spite  of  the  statements  in  the  memorandum, 
finally  ordered  reparation  vat  dyes,  but  no  other  vat  dyes,  and 
the  unused  balances  of  their  import  licenses,  which  they  first 
placed  with  the  Alliance,  and  later  countermanded,  will  be  avail¬ 
able  to  them  for  import  from  other  sources.  Five  of  the  signa¬ 
tories  did  not  approach  the  Alliance  in  any  manner  by  corre¬ 
spondence,  or  otherwise.  One  had  only  lately  filed  his  alloca¬ 
tion  certificates  with  us,  but  no  order  as  yet.  Two  placed  with 
the  Alliance  their  full  order  for  vat  dyes  so  far  as  known.  This 


in  itself  goes  far  to  destroy  any  weight  that  might  otherwise 
attach  to  the  sincerity  of  the  memorandum. 

On  page  9,  paragraph  1,  it  is  claimed  that  the  Textile  Alli¬ 
ance,  Inc.,  may  give  a  friendly  consumer  the  dye  it  seeks,  while  on 
an  unfriendly  consumer  it  may  force  a  substitute,  or  to  discrimi¬ 
nate  between  the  consumer  and  his  agent  as  to  the  kind  of  dye  it 
will  allot  to  each  license.  This  statement  shows  complete  ignor¬ 
ance  of  the  arrangements  made  by  the  War  Trade  Board  Section 
of  the  Department  of  State,  which  has  kept  in  its  own  hands 
the  “allotting”  or  “allocation”  of  dyes.  The  Textile  Alliance, 
Inc.,  has  no  power  in  such  a  case,  except  to  distribute  the  avail¬ 
able  supply  of  each  separate  dye  to  holders  of  licenses  in  pro¬ 
portion  to  the  amounts  called  for  by  the  licenses  and  the  alloca¬ 
tion  certificates. 

Mr.  T.  A.  Harris  was,  therefore,  under  a  misapprehension 
when  he  said  to  the  committee  that  the  Textile  Alliance  had 
delayed  in  allotting  dyes  on  his  application.  His  order  to  the 
Textile  Alliance  was  dated  December  9,  received  on  December 
10,  and  answered  December  11,  and  that  is  all  the  correspondence, 
so  far  as  we  can  ascertain  by  telephone,  that  the  Textile  Alliance 
has  had  with  Mr.  Harris’  firm. 

The  most  serious  cause  of  annoyance,  apparently,  to  the  signa¬ 
tories  of  the  memorandum,  although  they  are  all  consumers  of 
dyes,  is  the  fact  that  the  Alliance  must,  under  its  instructions 
from  the  State  Department,  sell  to  the  consumers  and  to  the 
importers  at  the  same  price  and  at  cost,  which  may  be  lower  than 
the  importers’  own  prices.  To  this  the  Alliance  must  plead 
guilty.  It  is  not  true  that  the  importer,  as  stated  on  page  No.  8, 
must  sell  to  his  consumer  at  a  price  higher  than  that  quoted  by 
the  Alliance.  He  may  do  so  if  he  chooses,  that  practice  being 
expressly  authorized  by  the  State  Department  as  to  dyes  im¬ 
ported  through  the  Alliance  by  importers.  There  is  nothing 
whatever  to  prevent  an  importer  from  importing  dyes  on  alloca¬ 
tion  certificates  assigned  to  him  and  on  licenses  obtained  by  him 
from  other  sources  than  the  Cartel  and  the  reparation  sources, 
selling  them  at  whatever  prices  he  may  choose.  This  fact  was 
recognized  on  the  19th  of  November  by  the  counsel  for  Kut- 
trofif,  Pickhardt  &  Company,  Inc.,  when  he  proposed  to  the 
officers  of  the  Textile  Alliance,  Inc.,  that  the  Cartel  option 
should  be  allowed  to  lapse,  and  undertook  in  case  the  Alliance 
should  accept  the  suggestion  to  hold  the  Alliance  harmless  from 
losses  in  case  dyes  imported  by  the  Alliance  should  be  found  to 
be  in  excess  of  consumers’  requirements  after  the  arrival  of 
Messrs.  Kuttrofif,  Pickhardt  and  Company’s  own  importations. 

As  the  memorandum  reiterates  on  pages  Nos.  10  and  11  that 


115 


consumers  have  expressed  their  wish  that  they  do  not  desire  to 
procure  dyes  through  Government  agencies,  and  that  consumers 
are  deprived  of  free  choice,  and  that  there  is  a  feeling  of  dis¬ 
satisfaction,  it  may  be  reaffirmed  that  the  Textile  Alliance,  Inc., 
regrets  the  dissatisfaction,  that  it  believes  it  to  be  due  in  large 
part  to  misrepresentation  and  misunderstanding,  and  that  there 
has  been  no  compulsion  and  will  be  no  compulsion  or  interfer¬ 
ence  with  such  use  of  allocations  and  import  licenses  as  con¬ 
sumers  may  wish  to  make  even  where  they  may  have  been  as¬ 
signed  to  the  Textile  Alliance,  Inc.,  unless  upon  the  faith  of  such 
action  by  the  consumers  the  Textile  Alliance,  Ing.,  shall  have- 
entered  into  financial  engagements  or  commitments  by  which  it 
is  bound. 

The  Textile  Alliance  or  its  officers  have  no  quarrel  with  those- 
who  are  opposed  to  the  licensing  of  imports  as  in  the  case  of 
Colonel  Wood,  Mr.  Metz,  or  others,  or  with  those  who  desire  to- 
protect  and  maintain  their  business  as  importers  of  dyes  or  of 
other  commodities-.  It  makes  this  statement  solely  for  the  pur¬ 
pose  of  correcting  the  misapprehension  which  the  pamphlet  and 
the  proceedings  of  the  committee  have  given  rise. 

At  the  close  of  the  case  presented  by  George  Deming,  Esq.,  he- 
offered,  among  other  exhibits,  a  letter  from  the  Textile  Alliance, 
Inc.,  to  the  Franklin  Process  Company.  The  letter  in  question  is- 
as  follows : 


November  28,  1919. 

Franklin  Process  Company, 

Providence,  R.  I. 

Gentlemen  : 

I  am  directed  to  acknowledge  receipt  of  your  telegram  of  No¬ 
vember  28,  and  to  inform  you  that  you  must  decide  for  your¬ 
selves  whether  the  risks  and  disadvantages  attendant  upon  the- 
importation  of  dyestuffs  through  the  Textile  Alliance  are  suf¬ 
ficiently  compensated  by  the  advantages  that  you  may  gaim 
thereby. 

As  the  Textile  Alliance  is  acting  in  a  quasi-official  capacity 
on  behalf  of  the  State  Department,  its  officers  do  not  consider 
themselves  in  a  position  to  refuse  to  accept  such  business  as  you, 
may  tender  on  equal  terms  with  other  consumers.  You  may, 
however,  accept  this  assurance  that  such  business  as  they  may  be 
compelled  to  transact  with  you  will  be  exceedingly  distasteful  to- 
them. 

Yours,  respectfully, 

Textile  Alliance,  Inc. 


The  president  of  the  Textile  Alliance  takes  the  responsibility. 

116 


for  this  letter.  It  was  written  to  a  firm  which  had  made  a  request 
for  special  privileges  not  available  to  others  and  which  had  ex¬ 
pressed  a  complete  lack  of  confidence  in  the  management  and 
integrity  of  the  Alliance.  It  may  be  added  that  in  spite  of  this 
attitude  on  their  part,  they  obtained  every  advantage  to  which 
they  were  legitimately  entitled. 

Respectfully  submitted, 

Textile  Alliance,  Inc., 

By  Albert  M.  Patterson, 

President. 


